Furlough payments ensured millions of employees saw the impacts of coronavirus have a limited effect on their circumstances. The furlough scheme was extended and adapted a number of times over the course of 2020 but recently, Rishi Sunak confirmed the scheme would end come October 31.
A Job Support Scheme was launched to replace furlough payments which was designed to keep people in employment as businesses struggle through the winter months.
Originally, the new scheme offered drastically lower levels of support when compared with furlough rules but recently, the Government addressed this as the prospect of a second lockdown emerged, as Dan Stopp, a UK Accounting Manager at Bokio, explained: “Unlike the previous measures, the new Job Support Scheme will mean that businesses will be obliged to bolster the state’s contribution, in order to make up their employees’ entitled salary.
“Fortunately, recent amendments to the scheme have dropped the financial burden, meaning employers need to contribute just five percent of the cost for employees’ unworked hours.
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“Meanwhile employees need only work 20 percent of their hours to be eligible for the scheme, down from 33 percent as originally announced.”
Despite the efforts from the Government to curtail some of the issues with the new scheme, Dan went on to want employers may still struggle, which will have an eventual impact on employees: “Whilst these recent changes have been widely welcomed, there still remains significant concern amongst many businesses around the UK.
“It is clear that the new rules regarding the contributions to employees’ pay will inevitably leave some businesses with a tough decision to make: either to keep on more staff but at reduced part-time hours and cover the overheads, or work on a skeleton staff, both of which could be detrimental to the employer, employee and the UK economy.
“At this stage, the Government has committed to a six month period (until 30th April 2021) during which the Job Support Scheme will remain open to those who require and qualify for it.
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“It is fair to say that there have been significant changes, extensions and modifications made to various support initiatives, so it would not be a surprise that as things develop the Government may react accordingly.”
According to the Government, reviews of the terms of the scheme will occur in January.
Eligibility for employees will be based on how long they’ve been on their companies PAYE payroll.
To be eligible, they must have been on the payroll between April 6 2019 and 11:59pm September 2020.
While it remains to be seen how employees will fare under the new scheme, some experts within the field remain pessimistic.
Becky O’Connor, the Head of Pensions and Savings at interactive investor, called on savers to take action as she expressed doubt over how stable finances will be in the coming months: “It’s always Halloween at the end of October but this year feels like a real life horror show for the personal finances of many people around the country, as official support schemes wind up or become less generous and as lockdown measures intensify in hotspots around the country.
“Ongoing further tier lockdown measures in the coming weeks will put the income of thousands of affected workers in peril and the new support offered in the winter plan might not prevent the nightmare facing some workers.
“Arming yourself with a plan and as much information as possible about what you can do should the worst happen, will help you feel less scared of the future.
“Getting support can feel like scrabbling around in the dark but there are amazing debt charities out there, as well as Citizens Advice, to help you find the light at the end of the tunnel.”
Similar sentiment was shares by Myron Jobson, a Personal Finance Campaigner also based at interactive investor, who laid out guidance for people to get on top of their finances: “The end of the furlough scheme and support measures for those struggling with debt during the coronavirus crisis in their current forms will be the real-life nightmare for many Brits this Halloween.
“With hopes of an end of the COVID-19 economic disruption by Christmas dashed, it is important that people continue to pay extra attention to their financial wellbeing and consider the actions they can take now to maintain financial buoyancy to avoid money worries later on. This might mean topping up on your emergency cash fund if you have the means to do so, and/or cutting down on non-essential expenditure. A good way of identifying holes in your finances is by doing an emergency budget.
“It is difficult to shake the feeling that we won’t returning to the status quo anytime soon. Those struggling financially needn’t suffer in silence. Help is available. The Financial Conduct Authority has recently announced package of support for people struggling with repayments to ensure help is available after October 31 2020.”