Covid-19: Furlough 2.0? How the new government scheme to protect jobs works

Rishi Sunak has revealed new measures to help safeguard jobs.
Rishi Sunak has revealed new measures to help safeguard jobs. Credit: PA

Chancellor Rishi Sunak has unveiled new financial support measures to help businesses which have to close their doors due to coronavirus restrictions.

But what are they, how will they work and who does it help?

What's been announced?

The government is set to pay two-thirds of wages for workers who are legally unable to attend their jobs due to lockdown restrictions.

This is an expansion of the Jobs Support Scheme.

Any business in the UK forced to close their premises due to local restrictions will be eligible for cash grants worth up to £3,000 per month - up from the £1,500 every three weeks which was available previously.

Employees in these businesses will have two thirds of their wages paid by the government, worth up to £2,100 a month.

It is thought the scheme could benefit hundreds of thousands of businesses, including restaurants, pubs, nightclubs, bowling alleys and many more.

But it could cost "hundreds of millions a month", a treasury source said.

The scheme will be open from November 1.

Who will the scheme help?

Firms which are legally required to close over the winter period.

The scheme is UK wide and the UK government will work with the devolved administrations to ensure the scheme operates effectively across England, Scotland, Wales and Northern Ireland.

Businesses do not need to have previously used the Coronavirus Job Retention Scheme to be eligible for the new support.

How will it work for employees?

Employees will have two-thirds of their wages paid for by government, up to a maximum of £2,100 per month.

Employers can top up the remaining wages but are not obliged to.

This is different to the furlough scheme, where the government paid 80% of employees' wages, up to £2,500.

Pubs and other premises could be hit hard by new measures to limit the spread of Covid. Credit: PA

Although the money will come from the government, employees will still receive their wages through their employer.

While on the scheme, employees cannot work or volunteer for their employer, but they can work or volunteer for another business or charity.

How will it work for businesses?

Employers will only be able to claim for the period they are legally required to close.

They will not be required to contribute towards wages but will be asked to cover the employee’s National Insurance and pension contributions.

The employer will be able to make a claim online through from December 2020 and will be paid every month by HMRC.

Employees will need to be not working for a minimum of 7 consecutive (or calendar) days at any given time.

What about the government’s other support schemes?

In addition to the expansion of the Job Support Scheme, the government is increasing the cash grants to businesses in England shut in local lockdowns to support with fixed costs. These grants will be linked to a business’ turnover, with up to £3,000 per month available.

If the business used the Coronavirus Job Retention Scheme, they will also be able to claim the £1,000 Job Retention Bonus in the new year - a one-off payment made to businesses for each employee they previously furloughed and keep employed until 31st January 2021.