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Millions of workers will receive a life preserver after government support for their wages was extended for four months.
Workers will now be able to get 80% of their salary, up to £ 2,500 per month, until the end of October if they are long term due to Covid-19.
It is a lifesaver for the 7.5 million people who have been suspended, from bar staff to bartenders and office workers left behind in the lurch.
But it comes with a stinger in its tail: the government will no longer finance companies for the full cost of the plan as of August 1.
Instead, the government will only give companies a smaller percentage of cash, and will expect companies to do the rest on their own.
This is likely to raise fears that companies may make people redundant if they cannot afford the difference.
And full rates have yet to be confirmed. Here is everything we know so far.
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What is the licensing scheme?
(Image: Alamy Stock Photo)
The Coronavirus job retention scheme runs in its entirety from March 1, 2020 to June 30, 2020.
During that period, any worker who is “suspended” due to the coronavirus has 80% of his salary, up to a ceiling of £ 2,500 per month, paid by the state.
This includes staff whose jobs do not exist temporarily due to coronaviruses, such as those in pubs and restaurants that have been closed.
It also includes people whose businesses couldn’t afford to keep them due to the broader impact of Covid-19.
The money is paid to the worker’s company and then passed to the worker in a reduced wage package.
The scheme is being used for a phenomenal 7.5 million workers. The idea is that it stops companies from making people redundant and means they are ready to restart immediately when companies reopen.
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What has the chancellor announced today?
(Image: WILL OLIVER / EPA-EFE / Shutterstock)
Chancellor Rishi Sunak has announced that the scheme will run for four months until October 31.
It will be available to all employers in all sectors.
Until the end of July there will be “no change”.
But crucially, from August to October the amount of money that the government pays to companies will be reduced.
Along with that there will be an effort to get employees back to work part time.
Right now, the government pays companies 80% of an employee’s salary up to £ 2,500 per month.
Starting August 1, this will drop, but we don’t know how much yet. It may vary sector by sector. Rumors say it will drop to 60%.
Full details will be announced in late May.
Will I receive less money?
No.
At least, not at first glance.
The chancellor says that despite the cut in government cash, he should continue to receive up to 80% of his salary from August to October.
This is because employers will be asked to “share” the cost of keeping workers suspended on the payroll.
Together, the government and employers will make up 80% together.
But the announcement is sure to spark a wave of uncertainty, because there’s nothing stopping companies from firing people if they decide they can’t afford it.
Will companies decide that they can pay the gap that the government requires? Or will they decide they can’t afford it? He is unknown.
Will I be back part time and when?
Unauthorized workers are likely to be asked to return part-time for a specified number of days a week starting in August.
The number of days will vary by sector, business, and individual, and could affect the amount paid by the state.
Workers are expected to be asked to return for just one day a week.
But that will make the scheme more complicated, because at this time the staff is not allowed to have any work.
Officials insisted that the plan will be monitored to ensure that people who are supposed to work just one day a week are not exploited, and were asked to do more.
However, the full plans will only be released later in May.
How much will the government pay companies?
The government will continue to pay companies more than half the wages of suspended workers until October, the sources said.
Reports have suggested that the amount funded by the state will be reduced from 80% to 60%.
And officials insisted that the “most substantial” amount would still be funded by the government.
But the exact amount paid by the state will only be confirmed in late May.
And it is not clear whether the percentage will be reduced by a flat rate across the board, or differently for different sectors.
If my business is completely closed, will they still have to pay for me?
It is believed that even companies that are still fully closed in August will have to make some contribution to staff pay.
The government has said that restaurants and cafes can start reopening as of July 4.
But sources have made it clear that some places, like pubs, gyms, and nightclubs, may take much longer to reopen.
Could I be fired?
The chancellor insisted that employees will get 80% of their regular salary, up to £ 2,500, regardless of state aid.
But it looks like companies won’t be banned from getting laid off if they decide they can’t pay the wage bill.
A government source said it is up to employers to make licensing decisions, with the consent of employees, and “that will continue to be the case.”
Officials dismissed fears that companies would fire people, saying a variety of other supports were available, including commercial loans and grants.
What if I am self-employed?
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The chancellor made no announcement today for freelancers.
Currently, eligible freelancers can earn a single taxable grant worth 80% of their average monthly earnings for the past three financial years (2016/17 to 2018/19).
The grant will be limited to £ 2,500 per month and will be paid in one lump sum in June for the months of March, April and May together.
Officials are understood to be seeking possible additional support for the self-employed, but nothing is guaranteed and there is no impending announcement.
Any announcement about self-employed workers would only be made at a later date.
This is because, although clarity was urgently needed for employees to prevent their dismissal in late June, self-employed people receive a one-off allowance.
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Why is he less generous?
Chancellor Rishi Sunak had insisted that there would be no “cliff edge” ending to the licensing plan.
But he also emphasized that it cost as much as the NHS and was simply not affordable in the long run.
The roadmap to facilitate the blockade said: “These measures are extremely expensive and cannot be sustained for an extended period of time.”
“As the UK adjusts the current restrictions, the government will also need to reduce economic support measures while people return to work.”
This is essentially a political decision of how much money to give people.
Deputy Director of Labor Angela Rayner “needs to continue … as long as we need it” and “cannot be reduced.”
If I am suspended, do I have to come back tomorrow?
No.
But this is not a difficult deadline, more a suggestion to change behavior, and it’s mainly about people who were able to work anyway.
(Image: PIPPA FOWLES / DOWNING STREET HANDOUT / EPA-EFE / Shutterstock)
It is aimed at more than 5 million people working in construction and manufacturing, who were never technically closed.
Industries that have been shut down, or companies in difficulty, are not ordered to withdraw their staff from leave early due to Boris Johnson’s announcement.
The license changes and the ‘return to work’ announcement will likely end up overlapping, but technically they are two separate things.
Will the March 19 deadline be extended?
Not that we know of.
There is a gap in the licensing plan for people who started a new job, or were between jobs, in March.
Sunak bowed to the pressure and extended the deadline from February 28 to March 19.
But tens of thousands of ‘new holders’ still don’t qualify, because their first payday must have been before March 19.
More than 4,000 people, including Greater Manchester Mayor Andy Burnham and Labor and SNP MPs, signed an open letter from the New Starter Justice campaign calling for the loophole to be closed.
However, officials have shown no signs of making a further decline. They say they need a court system and rule to prevent fraud.
Will the plan go beyond October 31?
It is understood that the Chancellor wants October 31 to be the date the license plan ends completely.
It could be extended again, but government officials said that was not the intention.
How much will it cost the state?
The government has not said how much the scheme will cost, but so far it has cost £ 10 billion.
The 7.5 million figure refers to the number of jobs, rather than the number of people, supported since March.
Some people are on leave from more than one job.
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