HomeInsightsThe furlough strikes back (or does it?)

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When the Government’s Job Support Scheme (JSS) was announced last month, it seemed as if the UK was finally going to pull the curtain on furloughing once and for all. However, given the increasing concern regarding Covid spread within certain parts of the UK, times have clearly changed.

The Chancellor, Rishi Sunak, has this afternoon announced a return of furlough in all but name. With the expectation that some businesses (particularly those in the hospitality industry) will be required to close in certain parts of the country from as early as this Monday, 12 October 2020, the protection afforded by the JSS is now due to be extended considerably for businesses that are forced to close.

When originally announced, the sole function of the JSS was to allow employers to agree the reduction of a worker’s hours (provided they work at least 33% of normal hours) with the scheme paying a contribution of a 1/3rd of wages for hours not worked provided the employer covered another 1/3rd. Today’s announcement does not change this and the JSS will continue to function this way when it launches on 1 November 2020 for businesses that are able to continue operating.

However, if a business is required to close due to local or national coronavirus restrictions, the JSS will work differently and the government will pay two thirds of the ‘furloughed’ worker’s wages, up to a maximum of £2,100 per month. In such circumstances, employers will not be required to contribute towards wages but will need to cover national insurance and pension contributions. This measure will also launch on 1 November 2020 and will apply throughout the UK and not just England (unlike some of the recent Covid-19 legislation).

Current reports suggest that shutdowns will be limited by region and will be limited to hospitality businesses. While we hope that similar measures will not be required nationally or in the types of workplace that will have most impact on our clients (for example, Film and TV productions), it is clearly difficult to predict how things will develop in the coming weeks. It’s therefore important that you are aware of this new extension to the JSS in case it becomes relevant to your business.