Our columnist, Matthew Ainscough, Bell & Buxton incorporating Ironmonger Curtis, with a rundown for employers on the new Job Support Scheme
The original Coronavirus Job Retention Scheme (“furlough scheme”) is due to close on 31 October 2020. This will leave many struggling businesses with decisions to make about their employees.
However the government is not completely withdrawing its support, and on 24 September 2020, the Chancellor announced the Job Support Scheme (“JSS”). Then on 22 October 2020, the Chancellor announced a package of further economic measures to support businesses affected by the pandemic, including some changes to the JSS.
The JSS will be available in the UK from 1 November 2020 and will run for six months until 30 April 2021. The aim is to safeguard viable jobs in businesses that are facing lower demand over winter due to the impact of COVID-19. The idea is that the government and the employer will share wage support for employees working reduced hours. However, employers will need to contribute more than they did under the furlough scheme.
At the time of writing, the main points of the scheme are as follows:
- Employees must work (and be paid by their employer for) at least 20% of their usual hours.
- For the employee’s remaining (unworked) hours, the government will pay up to 61.67% of the employee’s normal wages, and the employer will contribute the other 5% of the unworked hours (rather than 33% as originally announced). The employee will not be paid for the remaining unworked hours.
- The government grant will be capped at £1,541.75 a month.
- The grant will not cover employer national insurance or pension contributions, which will remain payable by the employer.
- To be eligible, employees must have been on their employer’s PAYE payroll on or before 23 September 2020. They do not need to have been previously furloughed.
- Employees will be able to “cycle on and off” the scheme and will not have to work the same pattern each month, but each “cycle” must cover at least seven days.
- Employees cannot be made redundant or given notice of redundancy during the JSS period.
- All small and medium-sized businesses can participate in the JSS. Larger businesses will only be eligible if their turnover has fallen during the pandemic and they do not pay dividends whilst using the scheme.
- Employers who retain previously furloughed staff on shorter hours will be able to claim under both the JSS and the Jobs Retention Bonus.
- The government grant can only be used as reimbursement for wage costs actually incurred so employers cannot defer payment to employees until they have received payment from the government.
- The employer must have written agreement to the scheme from the employee.
The first iteration of the JSS did not provide support to businesses that are legally required to close their premises due to local or national COVID-19 restrictions, as the premise of the scheme is that the employee is required to work one fifth of their normal hours. However, on 9 October 2020, the Chancellor announced an extension to the JSS. The extension will also apply from 1 November 2020 and will help businesses that are legally required to close their premises as a direct result of local or national COVID-19 restrictions.
The end of the furlough scheme and the start of the JSS could create a “cliff-edge” for employers, as they will be forced to decide which jobs are sustainable in both the short-term and the long-term. Employers will also need to weigh up their ability to pay a proportion of unpaid hours against the potential costs of redundancy and other options, for example employers may prefer to agree reduced hours arrangements with employees without accessing the JSS, which could be a more cost-effective option for them.
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