Chancellor Rishi Sunak has boosted the generosity of his new “job support scheme” to make it more appealing to employers.
Rather than having to pay 33pc of unworked hours for employees they can only bring back part-time, businesses will only have to pay 5pc. The Government will make up another 61pc so the employee receives two thirds pay for the hours they are not working.
The scheme will replace the current furlough system from Nov 1. The new proposals were originally criticised as not generous enough to convince employers to keep staff on.
Furlough has been a safety net to millions during the pandemic but was only temporary as it “wrongly” held workers in jobs that only existed because of the grant, Mr Sunak said.
Instead people should be supported in “viable” jobs and create new jobs that provide genuine security, he added.
Unlike during the Spring lockdown, the vast majority of businesses are open but with reduced demand. The new job support scheme has been created to avoid redundancies for those who are forced to work fewer hours.
What is the job support scheme?
It is designed to prevent employees from being made redundant over the winter months as new restrictions seek to curb the spread of Covid, and will support people who can work but on shorter hours.
Without the scheme it was likely businesses would make some of their staff redundant and keep others full time. Now they can keep employees on part-time, with the Government contributing to wages alongside its £1,000 “job retention bonus” which pays employers to bring people back off furlough.
How will the job support scheme work?
Employees must work at least a fifth of their normal hours and be paid as normal for what they work, so the scheme is open to those who only work one day a week.
The Government and the employer will then top up wages for any hours not worked and the employee will have to suffer some loss in income. Employees working 33pc of their hours will receive 73pc of their full-time pay and be able to keep their job, the Chancellor said.
The more hours someone works, the smaller hit they have to take versus their old income. The employer and Government also contribute a smaller share.