The Job Support Scheme
Yesterday, Rishi Sunak, the Chancellor, announced the Government’s new job retention measures in a statement to the House of Commons.
The Chancellor confirmed that the current support for employers, the Coronavirus Job Retention Scheme (also referred to as the furlough scheme) will end on 31 October 2020 and will not be extended. A new scheme, the Job Support Scheme (‘JSS’) will apply from 1 November for a period of six months and is part of the Winter Economy Plan.
The JSS aims to support ‘viable’ jobs i.e. those that are likely to survive the pandemic, by supporting the wages of employees who are able to work a minimum numbers of hours, rather than continuing to safeguard all jobs, which was the aim under the furlough scheme.
An important point for employers to note is that unlike the furlough scheme employees cannot be made redundant or put on notice of redundancy while the employer is accessing the JSS.
In order to qualify, employees are required work at least a third of their normal working hours, with those wages being paid by their employer. For the remaining contractual hours not worked, the Government and the employer will pay one-third of those wages each. In effect, an employer would pay 55% of an employee’s salary, and the Government would pay 22% (up to a maximum of £697.92 per month). An employee working 33% of their hours will therefore receive up to 77% of their pay, where the Government contribution has not been capped.
The question that comes to mind is why would an employer consider paying 55% of an employee’s salary when the employee is only working a third of their hours?
The JSS is likely to be most beneficial for employers who have a skilled, trained workforce and who are confident that once the current pandemic restrictions are lifted, they will need that workforce to return to work. Continuing to employ the workforce for the next six months under the scheme will save on recruitment and training costs in the long run, and prevent a situation where the employer is unable to return to full productivity quickly when restrictions are lifted because of a lack of trained staff. Retaining staff under the JSS will also delay having to consider redundancies and the cost of redundancy payments for the employer.
Key Points Of The JSS
The focus of the JSS is to support small and medium sized enterprises. However, the scheme is also available to larger business, but only where they meet a financial assessment test demonstrating that their turnover has been adversely affected by the pandemic.
The JSS applies to all employees who are on an employer’s PAYE payroll on or before 23 September 2020, regardless of whether the employee has been previously placed on furlough under the old scheme. However, it cannot be utilised if an employee is already subject to a redundancy notice.
The Government’s contribution will be capped at £697.92 per month. Employers will be reimbursed in arrears. We expect the claims process will be very similar to the existing furlough scheme. The Treasury have published a factsheet to explain how the JSS will work, this can be accessed here. Further directions and guidance will follow in due course.
The Chancellor also announced an extension to the Self-Employed Income Support scheme. The extension is limited to those who are currently eligible under the scheme and are actively continuing to trade but have faced reduced demand as a result of the pandemic.
Once we have received the detailed guidance, we’ll be providing a comprehensive Webinar on the operation of the scheme, restructuring considerations and Covid-19 response strategies more widely.
In the meantime, if you have any queries regarding the Job Support Scheme, the furlough scheme or redundancy, please contact a member of the team below.