September 25, 2020

New U.K. Job Support Scheme to Take Effect November 1

A new Job Support Scheme designed to protect jobs in businesses facing lower demand over the winter months due to the COVID-19 pandemic will take effect November 1, 2020 and last for six months, the U.K. government announced on September 24, 2020. It will replace the U.K. Coronavirus Job Retention Scheme (known as the U.K.’s furlough scheme), which will come to an end on October 31, 2020.

Under the new scheme, an employee must work at least 33% of their usual hours* for which they will receive their usual pay from their employer. For every hour that an employee has not worked, the U.K. government will pay one-third of the employee’s usual pay (capped at £697.92 per month), the employer will pay another third (uncapped) and the employee will forfeit the final third.

Employees can be moved on and off the scheme, but cannot be made redundant or given notice of redundancy whilst on the scheme.

Small and medium-sized enterprises (SMEs) will be automatically eligible. Large businesses will need to undergo a financial assessment test to demonstrate that their turnover has been reduced by the pandemic. The U.K. government expects large businesses not to make any capital distributions, such as dividend payments or share buybacks, while they are accessing the scheme.

Employers do not need to have previously used the Coronavirus Job Retention Scheme in order to be eligible under the new scheme, and will still be able to apply (if eligible) for the Coronavirus Job Retention Bonus.

Further guidance from the U.K. government is due to be published shortly.

*The proportion of hours an employee is required to work under the scheme is subject to a review by the U.K. government after the first three months.

As the number of cases around the world grows, Faegre Drinker’s Coronavirus Resource Center is available to help you understand and assess the legal, regulatory and commercial implications of COVID-19.

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