It replaces the 'furlough scheme' and will begin in November.
To be eligible the worker must do at least one-third of their normal hours, and the government and employer will pay one-third each of the lost hours.
The new scheme is part of a number of new measures announced by government on September 24.
Businesses in receipt of a Bounce Back Loan will have more time to pay through a new Pay as You Grow flexible repayment system.
Rishi Sunak, the Chancellor of the Exchequer, said: “The primary goal of our economic policy remains unchanged - to support people’s jobs - but the way we achieve that must evolve.”
Read more about this latest government announcement here.
Earlier this week the government announced new restrictions including the prevention of the opening of conference centres and exhibition halls.