Following on from the implementation this week of new restrictions aimed at reducing the spread of coronavirus, Chancellor Rishi Sunak announced his new Job Support Scheme. Designed to help maintain “viable jobs”, this will come into play from 1st November to follow on immediately from the end of the Coronavirus Job Retention or Furlough Scheme.

In what could be described as “Lockdown Light”, the new restrictions largely affect the hospitality and leisure sectors and impose new closing times for cafes, bars, pubs and restaurants and restrict the number of people allowed to gather in these venues to six. Office workers have once again been asked to work from home where this is a practical option.

Whilst the new scheme has mostly been welcomed as a good thing by industry bodies such as the CBI, not everybody is as up-beat about its potential. Some are questioning if it will be enough to save the jobs of the 3 million workers still who are still furloughed when the CJRS finally comes to an end. An initial look at the figures certainly throws up some questions.

The scheme promises to pay, up to a cap, one third of hours not worked for employees who continue to work at least one third of their normal hours. The employer must also contribute a third of pay for hours not worked.

Here’s an example and we’ve tried to use figures that are easy to follow:

An employee normally works 36 hours per week and earns £300. Their employer has seen a downturn in business due to Covid-19 and so reduces the worker’s hours to 12 hours per week. At one third of normal hours this qualifies for the scheme.
The scheme will pay for one third of the hours not worked (one third of 24 hours). So one third of £200 is £66.66 and the employer must match this; so the employee earns:

• £100 for 12 hours worked
• £66.66 from the Government scheme
• £66.66 from the employer
• Total = £233.32

Note also that the scheme will not contribute towards employer National Insurance or pension contributions and these costs must be born solely by the employer.

The scheme is meant to provide an alternative to redundancy and whilst we must not snub any financial support from the already strained treasury, it effectiveness does rely heavily on employers being extraordinarily generous.

If an employer has a number of employees, there is a very high chance that that they would sooner make two thirds of the workforce redundant rather than pay 55% plus NI and pension costs for staff members who are only doing one third of their work. And whilst Mr Sunak was very clear that the scheme should secure “viable” jobs, surely these are less likely to see the need to have hours reduced, even in the current conditions.

We should remember that there is the £1,000 bonus for employers who maintain jobs for previously furloughed employees until 31st January, and the reduction in VAT to 5% for the hospitality industry. Even so, the scheme will likely be of very little comfort to those in lower skilled jobs that are easy to re-fill or who are in roles where there is likely to be an abundance of available candidates.

Businesses need to recognise if they are existing in survival mode and take steps wherever possible to move back towards growth. This might mean grasping the nettle when it comes to making redundancies rather delaying the inevitable. It might also mean looking at diversifying the business by investigating at how existing skills can be used in different markets or industries.

It’s going to be a difficult winter but having the right mindset will be key to making it through to the other side. Talk to us about how we can support with training, consultancy and advice. Call us on 01452 331331 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it.