The Chancellor has extended the leave scheme by four months and said that Britain will continue to pay 80 percent of its wages during the coronavirus crisis.
Rishi Sunak today revealed that 7.5 million British workers are now making the state pay the bill for 80 percent of their salary up to £ 2,500 a month, or £ 30,000 a year.
The announcement that the leave scheme would not expire in early July, but would run until the end of October, speculation followed that it could be limited to certain companies or cut to 60 percent of wages.
But the chancellor said the government wanted to avoid a cliff-edge scenario, with a wave of job losses, although changes include allowing part-time work. We explain why the scheme has been extended and what it means for you.
Chancellor of the Treasury Rishi Sunak has extended the UK’s labor conservation scheme – known as leave – to the end of October
What is leave?
The leave scheme – known officially as the Coronavirus Job Retention Scheme – means that employees agree to be made redundant by their employer.
At the moment they are not intended to work and the taxpayer collects 80 percent of their salary, up to a maximum of £ 2500 per month.
The scheme was rushed when Britain closed the coronavirus and the consumer economy was interrupted, telling people to stay at home and telling companies to work from home or close their doors unless they were deemed essential.
Businesses were able to apply to the government to participate in the job retention scheme, and it has proved much more popular than expected, with about 7.5 million workers now being laid off by nearly a million companies.
Employees must agree that their employer will be given leave, which can then apply for the money from the government. They cannot apply for it themselves.
Employers can choose to pay the remaining 20 percent of people’s wages, although they are not required to do so.
Likewise, for those at over £ 2,500 a month, they can choose to ‘supplement’ what to match or get closer to their salary.
People must continue to pay income tax and national insurance contributions during their leave. However, employers should not ask them to do any work.
What will change with the leave schedule?
Renewing employees is currently an all or nothing matter. A company firing an employee is not meant to ask them to do any work.
Until the end of July, the scheme does not change from this current status at all, but after that companies can try to phase workers in again.
Businesses are expected to pick up part of the tab when they do this, reducing the cost of leave for the taxpayer.
Mr Sunak said: ‘From August to October, the scheme will continue for all sectors and regions of the UK, but with more flexibility to support the transition to work.
Employers currently using the scheme can return redundant workers part-time.
And we will ask employers to start sharing the cost of paying people’s salaries with the government. Full details will follow at the end of May. ‘
A gap will also be filled in the scheme, with workers who have started jobs and paid between 28 February and 19 March under the PAYE tax now covered by the scheme.
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Why has the leave scheme been extended?
The leave scheme initially ran until the end of May and has already been extended once until the end of June.
What is the use of the leave schedule?
The government wants the economy to have the greatest chance of pulling up when the lock is released and sees it as the best way to keep people at work.
Mr. Sunak said: “No one who participates in the leave scheme wants to participate in this scheme.
“People across the country believe in the dignity of work, going to work, looking after their families, it’s not their fault that their company was asked to close or stay at home.”
Despite the rising beak, extending the leave schedule is considered essential for this.
Today’s announcement provides greater clarity for companies and workers that they will continue to support in the summer and early fall and that the job retention scheme will pay 80 percent of wages until the end of October.
It followed the government’s exit plan for coronavirus, released yesterday, and Prime Minister Boris Johnson’s speech on Sunday evening, encouraging more people to return to work.
However, both the exit plan and the speech lacked concrete details about when the lockdown would be simplified and instead relied on a measure of the coronavirus threat.
With the six-week leave arrangement expiring, companies were concerned that they would not need all of their staff if the country was still in the early stages when it came out of the lockout, and workers feared they would lose their jobs soon .
A massive wave of redundancies would do the economy a double blow as people struggled to find another job in a closed state and were unable to pay mortgages, rents and bills.
Allowing part-time work is seen as one of the ways to lower the leave bill – and the Chancellor has chosen to cut the salary to 60%
Can my employer ensure that I return to work part-time?
The details of how the leave schedule will change to allow for part-time work have not yet been released and will not be known until the end of the month.
You will remain an employee during your leave and you will likely be asked to return part-time.
With due regard for existing employment rights, it is possible that an employer can return a dismissed employee part-time, even if he does not agree to a permanent change in his hours.
The Money Advice Service explains that staff may be asked to ‘work short’, which means cutting their weekly hours, or ‘layoffs’, when there is not enough work for them to be asked not to come in or to take unpaid leave take.
However, it adds that employee contracts should allow this and not all of them.
The Money Advice Services says, “Your employer can only fire you or oblige you to work fewer hours if your employment contract allows.
If not, your employer will have to negotiate a change to your contract. Usually many staff members will be involved and they or their union will have to agree to the new scheme.
“You should also check that your contract allows you to take another paid job while working fewer hours.”
Companies, personnel and unions will be keen to see such issues in detail when the Chancellor releases more information at the end of May, otherwise there is a risk of a labor dispute.
Can I get leave if I have a zero-hour contract?
You can use a zero-hour contract and also if you have a flexible contract or are employed by an agency.
How much does leave cost?
The Institute for Fiscal Studies said extending the leave scheme to the end of July in its current form would cost an additional £ 10 billion.
This would take up the total cost of the job retention scheme as it is estimated to be £ 60 billion.
The IFS said the cost of the extension from July to October, which would allow part-time work, with employers picking up part of the bill, wouldn’t be known until full details were revealed.
If you have a zero-hour contract, which means you don’t necessarily earn the same amount every month, your employer should give you 80 percent of your average monthly salary since you started working.
This also applies to employees who have been employed for less than a year.
If you worked for your employer for a year or more, you should receive 80 percent of your average monthly salary, or 80 percent of what you earned in the same month in the previous year – which is the highest.
Can I take leave if I am ill?
If you have fallen ill and your employer has had to cancel prematurely, you must first receive the statutory sickness benefit first, but then you can resign.
Those who isolate themselves because of the coronavirus can also be placed on leave.
People who are “shielded” and vulnerable to a potentially serious illness caused by the coronavirus can also be placed on leave.
Currently, workers can be fired from a minimum of three weeks to three months, although the government may wish to extend that.
I have been given leave, can I find a temporary job to earn extra money elsewhere?
You can do other work during your leave to earn extra money, but you must first check this with your employer.
There may be something in your contract that says you can’t, or that you should officially ask if you can and they can say no. If you are struggling financially, please indicate this in your request.
The government’s official rule is that if your existing employment contract allows it, you are free to look for another job while on leave and your 80 percent leave is not affected.
It is clear that if your employer pays your leave, it is difficult to ask if you can work elsewhere to earn extra money.
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