Chancellor announces expansion of Job Support Scheme – for businesses legally forced to close because of Covid restrictions

The Chancellor’s update this afternoon gave an indication of what’s to come for the next few months, with the launch of an expansion of the Job Support Scheme – announcing that the government will pay two-thirds of the wages of employees who work for UK businesses that are forced to shut by law, because of Covid restrictions.

Being widely billed as ‘Furlough mark II’, the new scheme will begin on 1 November and will run for six months, with a review in January.  The aim behind the new scheme is to protect jobs while businesses are closed due to legal restrictions and enable them to reopen promptly once restrictions are lifted.

Here’s what you need to know:  

  • The government grants will pay two-thirds of employee’s wages – up to a maximum of £2,100 per month
  • Employers will not have to make any contribution to their employees’ wages, if they are forced to close due to Covid restrictions (larger businesses will have to pay NI and pension contributions)
  • As with the Job Retention Scheme,  payments to businesses will be made to businesses in arrears, via a HMRC claims service, which will be available from early December
  • This new provision is not to be confused with the Job Support Scheme, which also starts on 1 November, but is aimed to support employees returning to ‘viable’ jobs, but on reduced working hours.
  • In addition to paying employee wages, cash grants (linked to rateable values) will also be available to businesses in local lockdown areas, paying up to £3,000 per month

It is worth noting that this support doesn’t cover businesses who are operating at reduced capability, but is only for those who are legally required to close, due to Covid restrictions.  Therefore, it’s clearly targeted at the hospitality and entertainment sectors, where employees will be unable to do their jobs, while the restrictions are in force.

Today’s announcement by the Chancellor is ahead of the anticipated update by Boris Johnson on Monday, which is expected to announce tighter local restrictions in areas with higher rates of the virus.

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