23 September 2020
Wage subsidy scheme may be introduced
The Chancellor Rishi Sunak is considering plans to replace the furlough scheme, which is due to end on the 31 October, with wage subsidies, similar to a German scheme, to help businesses survive a second wave of the Coronavirus.
Under one possible plan, devised by the CBI, a state subsidy is offered, if an employer is able to pay workers at least 50% of their normal hours. When staff are not working, the Treasury and the company would each cover a third of their wages, with the employee sacrificing the remaining third of their salary.
Meanwhile, the TUC has proposed that workers continue to receive 80% of their pay for the time they are not working, or 100% if they are on minimum wage.
Ahead of a possible announcement from the Chancellor, Boris Johnson said that he recognised there were additional demands for economic support.
“I know that my right honourable friend the chancellor will be applying, as I say, his imagination and his creativity to helping those sectors in the months ahead. But the best thing for them is to get back to life as close to normal as possible by getting this virus down and that is the point of the package of measures that we are announcing today.”
It is widely believed that the Treasury is aiming to reveal a new support package before the 1 October, when businesses are likely to start making redundancies to coincide with the end of the furlough scheme.
Jo Davis, employment partner, B P Collins says:
“As no announcement on wage subsidies has been made, employers who need to run a 30-day collective consultation process - which applies when the employer is making make more than 20 but fewer than 100 redundancies at one establishment - should be aware that the 1 October 2020 is the last date they could start this process.
“If the new support package does go ahead, whether it will save jobs, or help particular sectors remains to be seen. However, B P Collins’ employment team will keep abreast of all new changes in order to help employers make the necessary adjustments ahead of any deadlines.”