Job Support Scheme - Chancellor announces increases in the financial support for employers

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Job Support Scheme - Chancellor announces increases in the financial support for employers

Published 22 octubre 2020

In our alert on 25 September we set out an outline of the Government’s new Job Support Scheme (JSS Open) to support “viable” jobs in business who are facing lower demand in the winter due to COVID-19. This scheme was unattractive to many employers as, by its very nature, it made short-time employees relatively more expensive than full-time employees as the employer was required to pay a third of the cost of the hours not worked.

The Government announced today that the amount of Government support under the JSS Open will be increased with the employer contribution to unworked hours reducing to 5% and the minimum hours working time reduced to 20%. The extension of the Job Support Scheme announced on 9 October, (which the Government now refers to as the JSS Closed), for businesses legally required to close, remains unchanged.

The JSS Open will open on 1 November 2020 and will run for six months until 30 April 2021. It will now operate as follows:

  • The employee will need to work and be paid their contracted wage for at least 20% of their normal hours although they can work and be paid for more. This has been reduced from the previous 33%. So, employees who normally work 5 days a week will only need to work for one day a week to be eligible.
  • For the employees remaining hours that are not worked (up to 80%) an employee will receive 66.67% of his pay for that time (5% will be paid by the employer and 61.67% will be paid by the Government).
  • The level of contributions will be calculated based on the employee’s usual, pre furlough, salary, capped at £3,125 (the reference salary).
  • This means that an employee will earn a minimum of at least 73% of their normal wages, where their usual wages do not exceed the reference salary.
  • The level of the Government contribution to payment of the unworked hours, based on the reference salary, will be capped at £1,541.75 a month. This is an increase from £697.92 a month under the original version of the JJS Open. The employer contribution will be up to a cap of £125 per month.
  • Large employers (employers with 250 or more employees) will have to meet a financial impact test, so the scheme is only available to those whose turnover has stayed level or is lower now than before experiencing difficulties from Covid-19. There will be no financial impact test for SMEs and charities.
  • The Government states that it does not expect fully publicly funded organisations to use the scheme, as has been the case with the Coronavirus Job Retention Scheme (CJRS), but partially publicly funded organisations are eligible “where their private revenues have been disrupted”.
  • Employers will be able to make a claim online through Gov.uk from 8 December 2020. Grant payments will be paid monthly, in arrears, reimbursing the employer for the Government’s contribution.

The JSS Open is different to the JSS Closed which is for those businesses who are required to close and who's employees cannot work at all for the employer. In this case the JSS will provide eligible businesses support by paying two thirds of each of the employees normal pay, up to a maximum of £2,100 a month.

We are still awaiting further Guidance on the scheme. The Government has also said they will publish a JSS policy paper, giving further details on eligibility criteria, conditions and timescales for making claims under the JSS Open and the JSS Closed.

What does this mean for employers?

The improved benefits are likely to be welcomed by many employers and employees. Before making crucial commercial decisions, employers will want to consider the fine details of the JSS Open and the JSS Closed in the awaited Government Guidance. Given the time constraints this guidance is needed urgently. In the meantime employers should:

  • Consider whether there is sufficient work to enable employees currently on flexible furlough to do at least 20% of their normal working hours.
  • Review which employees could be moved to short time working under the JSS Open and what their current contractual arrangements are. As was the case with the CRJS, employers must agree the new working arrangements with their employees / unions. Employers must make any changes to the employment contract by agreement and notify the employee in writing.
  • Consider what collective and individual consultation needs to take place before the JSS Open is introduced.
  • Consider whether other options could be used outside the JSS Open, such as layoffs, short time working or unpaid leave.

 

Authors

Deborah Hely

Deborah Hely

Manchester

+44 (0)161 934 3025

Joanne Bell

Joanne Bell

Manchester

+44 (0) 161 934 3179

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