As the United Kingdom winds down the furlough scheme (under which the UK government funded 80% of furloughed employees’ salaries up to a capped amount), employers are looking at next steps, including cost-cutting measures such as reducing the size of their workforces.
In response to the concern that the end of the original furlough scheme will trigger a significant wave of job losses, on 24 September 2020, Chancellor of the Exchequer (the UK’s equivalent to the U.S. Treasury Secretary) Rishi Sunak (the “Chancellor”) announced that the Job Support Scheme will replace the furlough scheme from 1 November 2020, and will run until the end of April 2021. More details are to come about the Job Support Scheme, but here are the key points available so far:
While full information on the Job Support Scheme has not yet been published, it is important for employers to begin to understand and assess their options. The initial furlough scheme was intended to protect jobs and income of employees, but it is yet to be seen how effective this will be in the long run. The new Job Support Scheme is designed to protect “viable” jobs where employees are able to do some work, so not all employees and industries will benefit, and it is not nearly as generous as the current furlough scheme that it will replace. Despite the government’s efforts, there are still tough decisions ahead for employers.
Adair Cook, a trainee solicitor in our London office, contributed to the development of this article