25 Sep Job Support Scheme – what do we know so far?
After the announcement on Thursday 24th September 2020 from the government, we seem to have more questions than answers again, but this is what we can tell you so far…
The good news is there will be some extra support for the next 6 months to keep people in ‘viable’ jobs and avoid job losses. The bad news is that it is a significant cost increase for employers and for many it will not be viable for them to engage with the scheme.
It has been confirmed that the Job Retention Scheme will draw to a close on 31st October 2020, the scheme has been tapering and October will see the last change before it is no more.
From 1st October the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work. You will continue to pay ER NICs, pension contributions and then increase to 20% of wages for the hours the employee does not work to make up 80% of the total, up to a cap of £2,500
What’s the plan from 1st November 2020?
The Job Support Scheme (JSS) will replace the Job Retention Scheme (JRS) from 1st November 2020 and run for six months until 30th April 2021.
The new scheme is similar to the flexible furlough scheme introduced 1st July 2020, except that under JSS you would continue to pay employees for any time worked (up to a minimum of 1/3 or 33% of regular hours) and then the cost of regular hours not worked will be split between the employer, the government and the employee.
- Employers will pay a third of hours not worked (also responsible for costs of employers NIC and pension)
- Government will pay a third of hours not worked up to the cap
- Employee will forego payment for a third of hours not worked
This will ensure employees earn a minimum of 77% of their normal wages. The government’s chunk of the support will be capped at £697.92 per month.
For example, if an employee usually earned £2,000 a month working regular hours and they worked 50% of this time they would be paid the following:
- £1,000 for the hours worked
- £333 from their employer
- £333 from the government
- Total monthly pay – £1,666
Who can apply for the JSS?
Anyone who is in employment as of 23rd September 2020, can be put on the scheme – and it’s open to all small and medium-sized businesses who didn’t apply to furlough before.
Larger businesses will only be eligible when their turnover has fallen.
It’s also key to note that if you do take advantage of the scheme you will also be able to claim the Jobs Retention Bonus worth £1,000 per employee kept in work through to 31st January 2021.
What are some other options?
You may have already thought about or even started looking at reducing your workforce through redundancy. One key difference in the JSS as opposed to the JRS is that employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the JSS grant for that employee. So, if you’re looking to plan for job losses keep this in mind when deciding on timescales and reviewing costs.
Of course, there are many of you guys who want another option to both JSS and redundancy and there are still some other routes to consider:
- If you have a lay-off and short-time working clause in your contracts then you can always revert to this if genuinely needed and you have a good business case for keeping people employed rather than making redundancy dismissals.
- You could continue with your own version of furlough but without the benefit of the government grant. However, this does mean amending employees’ terms and conditions for a specified period of time, so talking about this option with those affected sooner rather than later and gaining agreement will be the way to go.
- Bringing employees back to work on reduced pay but the same hours is an option, albeit maybe not a popular one with employees. Some employers have already gone down this route with their previously un-furloughed staff and this could be something to consider, at least temporarily, to allow you to get back on your feet. Again, start talking now as agreement will be needed.
- It may be appropriate to offer some or all of your employees some unpaid or part paid leave or an unpaid sabbatical leave period, this will allow you to transition staff and retain your workforce. ‘Offer’ here is the critical word, i.e. employees do not have to accept the offer and it cannot be imposed.
What’s yet still unclear?
How to make an application to the scheme –
We imagine this is not going to differ greatly from the furlough and flexible furlough scheme that have come before. For these, employees were put onto furlough by their employers, then employers were then able to claim back the portion of wages from the government through their HMRC portal. Watch this space for more info.
What defines a ‘viable job’ –
Again, there is no definitive answer to what the government mean by this, however we understand this to mean that the job is needed by the business and is likely to be needed into the foreseeable future.
The government factsheet states that more detailed guidance on the calculation of eligible wages will be published shortly. A waiting game on this one so we can see exactly how this should be calculated, particularly for those on variable hours.
Periods to use JSS –
When the JRS was initially launched, it was only to be used in minimum periods of three weeks. There has been no mention of minimum periods under the JSS, however that’s not to say in that when the detailed guidance is released this will not be something stipulated.
Whatever your needs are during this time we can help, so please get in touch.
This factsheet has been created on Friday 25th September 2020. Please note that details are subject to change. Updates will be created and issued as and when available.