Chancellor Rishi Sunak has today confirmed that the furlough scheme (formally the Coronavirus Job Retention Scheme) will come to an end, as previously announced, on 31 October 2020.  Furlough will be replaced by a new "Job Support Scheme" (JSS), based on a policy of wage support closer to the existing scheme operated in Germany.

In summary, the JSS involves the government supporting the wages of those in work, the intent being to give employers the option of keeping staff in work on reduced hours, rather than being forced to make them redundant.  To be eligible, staff must have been on their employer's payroll on or before 23 September 2020, as a measure to avoid exploitation of the scheme.

Workers will be required to work at least one-third of their normal hours, for which they will be paid by the employer in the usual way.  (After the first three months of the JSS, this minimum hours threshold may be increased). Of the UNWORKED hours, the employer would then be required to pay one third, with the JSS contributing another third, so that an employee could potentially receive up to 77% of their normal salary for working one-third of their hours.  The government contribution will be capped at £697.92 a month, much in the way that support under the furlough scheme is also subject to a cap.

Larger businesses (with the precise threshold to be confirmed) will be ONLY be eligible if their turnover has fallen during the Covid crisis.  The government has made clear that large businesses should not be making capital distributions while accessing the grant.

The JSS will commence on 1 November 2020, and is due to last for six months until 30 April 2021.  One key difference from the furlough scheme is that employees cannot be made redundant (or put on notice of redundancy) during any period in which their employer is accessing grants under the JSS.

For self-employed workers, the Self-Employed Income Support Scheme (SEISS) has also been extended broadly in line with the new JSS, so that an initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. An initial lump sum will cover three months’ worth of profits for the period from November to the end of January 2021. This is worth 20% of average monthly profits, up to a total of £1,875. It is anticipated that a second grant would then follow for the period February-April 2021.

The announcement of the JSS has been cautiously welcomed, but Shadow Chancellor Anneliese Dodds was critical of the fact that (unlike the scheme in Germany) the JSS does not cover or incentivise training for staff members in order to build skillsets and experience.

Before the Chancellor's announcement of the JSS, the TUC, CBI and Acas had released a joint statement, urging employers to "exhaust all possible alternatives" before deciding to make redundancies.  Clearly, the introduction of the JSS is likely to be an additional factor to consider when businesses are making decisions about their workforce once the current furlough scheme comes to an end on 31 October 2020.