New Job Support Scheme benefits higher earners more than low income ones

THE new Job Support Scheme will benefit part-time workers earning high wages more, in comparison to Brits on low incomes.

The scheme, which replaces furlough from November 1, lets Brits return to work for just 20% of their usual hours and still qualify for help.

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Employees who are brought back part-time will be paid in full for the hours they work.

They’ll also receive 5% of the pay for hours they don’t work from their employer (capped at £125 per month) and 61.67% from the government (capped at £1,541.75).

In comparison, the furlough scheme covered 80% of wages – up to £2,500.

Brits earning £20,000 a year and returning to work 20% of their usual hours would earn just £1,222 per month before tax on the Job Support Scheme.

This compares to a higher £1,333 a month while on furlough, financial services firm Quilter has found.

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In comparison, someone earning £70,000 and working the same amount of hours would receive £2,833 in pay before tax on the Job Support Scheme – a rise from £2,500 on furlough.

But Brits on a £20,000 salary who are able to work 80% would earn £1,556 on the Job Support Scheme – compared to a lower £1,333 on furlough.

While £70,000 earners working 80% would receive £5,444 a month on the Job Support Scheme – more than double the £2,500 on furlough.

Higher earners benefit under the Job Support Scheme due to the monthly cap on the furlough scheme.

There’s no monthly cap on the Job Support Scheme as such, but employer and government contributions are capped on hours not worked.

Ian Browne, a wealth manager at Quilter, told The Sun: “Generally speaking this will affect lower paid workers doing less than 40% of normal hours.

“As a general rule, for those people earning £40,000 and over that were hitting the £2,500 monthly limit under furlough, they will now have the opportunity to break free of that limit under the new scheme and boost their monthly income.

“The switch from furlough to this new scheme is certainly favourable for higher earners that were receiving a smaller proportion of their monthly income under the cap on furlough payments.”

He added that wealthier employees may even use the opportunity to take partial retirement under better terms than usual.

Mr Browne said: “Older workers may fear an increased risk of redundancy and could find it harder to get back into a new role even once the economy recovers.

“So the opportunity to remain with their current employer under reduced hours may really appeal.”

A government spokesperson told The Sun: “The Job Support Scheme includes a cap on government and employer contributions so that anyone earning above a salary of £3,125 a month will receive a smaller proportion of their prior salary than a lower earner, unless the employer voluntarily topped up the wages of the higher earner.”

“Our focus from the outset has been on supporting those in need – and this support will continue as we look to create, protect and support jobs.”

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The furlough scheme is coming to an end on October 31, having supported more than 9million jobs during the pandemic.

Earlier this month, Chancellor Rishi Sunak announced that self-employed workers will able be able to benefit from a government grant of up to £3,750 – double the support of what was on offer before.

The Treasury previously said it would cover 20% of average monthly profits, up to a total of £1,875, covering November to January next year.

This post first appeared on thesun.co.uk