New job scheme v furlough - which is best?

How does the new jobs scheme compare to furlough?

By Nikkie Thatcher

- Last updated on GMT

Related tags: Finance, Legislation, Government, Recruitment

The Morning Advertiser takes a look at the difference the enhanced Job Support Scheme (JSS) will make to employees on minimum wage compared to the original Coronavirus Job Retention Scheme (CJRS).

The new jobs scheme means employees have to work at least a third of their normal hours, paid by the employer, starting on 1 November and running for six months.

The employer and the Government will together push wages to two thirds (one third paid by employer and one third paid by Government) of the employee's pay, which has been lost by a reduction in hours.

This means employers will have to pay 55% of an employee's pay and the Government will cover 22%.

The level of grant will be calculated based on employee's usual salary, capped at £697.92 per month.

Tapered support

The original furlough scheme, which was introduced earlier this year, allows businesses to furlough employees with the Government paying cash grants of 80% of their wages up to a maximum monthly pay of £2,500.

This scheme tapered from August when employers had to start making payments towards the furlough scheme, starting with national insurance (NI) and pension contributions from August.

From September, employers were asked to pay 10% of furlough wages with taxpayers contributing 70% and, from October, employers paid 20%, with taxpayers covering 60%.

The minimum amount to pay workers set by the Government is the national minimum wage (NMW), or national living wage (NLW) for those aged 25 and older.

Currently (from 1 April 2020), the minimum wage rate is £8.72 per hour for those aged 25 and over.

Comparing figures

As per the original furlough scheme, CJRS, employees would receive up to 80% of their wages, which equates to £6.98 per hour.

On the new JSS, from 1 November, employees will receive up to 67% of their wages. This works out to be £5.84 per hour – £1.14 less.

However, for those aged 21 to 24, the CJRS would have amounted to an hourly rate of £6.56 (80% of £8.20) for minimum wage. With the JSS, this falls to £5.49 per hour, £1.07 less than the original furlough scheme.

Workers aged 18 to 20 would receive £5.16 per hour (80% of £6.45) but with the new scheme from 1 November, this drops to an hourly rate of £4.32 – a difference of 84p.

Any employees who are under 18 would see the CJRS provide £3.64 of their £4.55 hourly wage with the CJRS, but the new scheme means this falls to £3.05 – 59p less.

For apprentices in a business, 80% of their wages equates to £3.32 an hour, dropping by 54p to £2.78.

Related topics: Legislation

Related news

Spotlight

Follow us

Pub Trade Guides

View more

FREE EMAIL NEWSLETTER

Subscribe to The Morning Advertiser

The definitive voice for the pub trade

Get the latest news, analysis and insights from the uk pub sector straight to your inbox!