Chancellor Rishi Sunak has announced a new support package to replace the furlough scheme in a battle to stave off mass unemployment during the difficult winter months.
The new "job support scheme" will start in November to replace furlough which ends on October 31.
Instead people should be supported in "viable" jobs and create new jobs that provide genuine security, he added.
Unlike during the Spring lockdown, the vast majority of businesses are open but with reduced demand. The new job support scheme has been created to avoid redundancies for those who are forced to work fewer hours.
What is the job support scheme?
It is designed to prevent employees from being made redundant over the winter months as new restrictions seek to curb the spread of Covid, and will support people who can work but on shorter hours.
Without the scheme it was likely businesses would make some of their staff redundant and keep others full time. Now they can keep employees on part-time, with the Government contributing to wages alongside its £1,000 "job retention bonus" which pays employers to bring people back off furlough.
How will the job support scheme work?
Employees must work at least a third of their normal hours and be paid as normal for what they work.
The Government and the employer will then top up wages for any hours not worked and the employee will have to suffer some loss in income. Employees working 33pc of their hours will receive 77pc of their full-time pay and be able to keep their job, the Chancellor said.
Someone who normally worked 40 hours per week, but now works 14 hours at £10 per hour will get £140 for their work, plus £78 bonus from their employer and £78 from the government for a total of £296. This means they are just £104 short of their usual wage for that week.
If someone who normally worked 40 hours a week on £10 per hour is asked to work 20 hours, they would receive £200 for their work, a £60 subsidy from their employer and £60 from the Government. This amounts to a total pay of £320 and they would only lose only 20pc of their salary.
The more hours someone works, the smaller hit they have to take versus their old income. The employer and Government also contribute a smaller share.
The Government will cap the amount it contributes at £697.92 per month, or £174.48 per week. A worker will hit the cap if they work 40 hours a week at more than £16.50 an hour.
Am I eligible for the wage subsidy scheme?
Anyone who was working as of yesterday is eligible. However, they must work at least one third of their normal contracted hours.
Businesses that have not used the furlough can also access the new scheme, but not all companies will be able to apply.
Large companies can access the scheme if their turnover has fallen significantly as a result of the pandemic, and small or medium sized businesses will also have access. Larger companies will have to show that their sales have been materially affected.
Will my company still pay me?
Yes, a company must pay the full wage for hours worked. It will then have to contribute a top up of one third of the hours not worked alongside the Government in order to receive the subsidy.
How can I apply for the wage subsidy scheme?
It is unclear how employees can apply for the job support scheme. However, it is likely to follow a similar process as the furlough scheme where a company contacts HM Revenue & Customs for a grant.
Employers are expected to have to designate the affected employees and notify the staff of this change.
What will happen to the furlough scheme?
The Job Retention scheme, known as furlough, will close as planned at the end of October. The Chancellor said furlough was a temporary fix but cannot be a long-term solution. Mr Sunak said it was “fundamentally wrong” to hold people in jobs that only exist because they are being propped up by furlough.
How long will it last?
The new scheme will replace the furlough support package from the beginning of November and will last for six months.
What if I was dismissed before the announcement?
Anyone who was employed as of yesterday will be able to apply for the new job support scheme.
Labour MPs have criticised the Treasury of making the announcement too late for many employers, which will have already let staff go ahead of a cliff-edge end to furlough.