Job Support Scheme

The Job Support Scheme was announced by the Chancellor of the Exchequer, Rishi Sunak, on 24th September following pressure to provide help for employers following the closure of the Coronavirus Job Retention Scheme on 31st October 2020.   It will run for 6 months from 1st November 2020 (reclaimable from December 2020) and will apply as follows.

The Job Support Scheme aims to protect viable jobs in workplaces that are suffering lower demand as a result of the impact of COVID-19.  “Viable” has yet to be defined however we do know that employees cannot be made redundant or be given notice of redundancy during the period in which the employer is claiming for.  Further clarification is required as to whether this means the employer cannot commence consultation whilst claiming, it seems the employer will be able to, provided they do not issue notice of termination.  It is unclear what will happen if the employee is on notice for any other reason.

Where an employee has had a reduction in hours due to a decrease in demand at the employer, the cost of the reduction will be split between i) the employer, ii) the Government, and iii) by the employee (in agreeing to a reduction in hours and wages).  Pre-furlough pay or hours will be used to calculate usual wages and a similar methodology to the CJRS will be followed.

For example, if an employee is contracted to work 40 hours per week (full time) but the employer is only able to provide them with 28 hours work they will be suffering a reduction of 12 hours.  The Government will pay a third of the hours not worked up to the cap mentioned below (4 hours in this case) and the employer will also be required to pay a third of hours not worked (4 hours).  Meaning the employee’s remuneration is only reduced by one third of the reduction in hours.  To be eligible to claim, the employee must be working at least one third of their contract hours (the Government will consider whether to increase this threshold after three months).

Essentially, for every hour not worked by the employee, both the Government and the employer will pay a third each of the usual hourly wage for that employee. The purpose is to ensure that employees receive a minimum of 77% of their normal wages subject to the following: the Government contribution will be capped at £697.92 a month (we currently understand this to be gross and then subject to tax and NICs in the usual way).

The grant will be made to the employer in arrears, reimbursing the employer for the Government’s contribution.  Class 1 employer NICS or pension contributions remain payable by the employer and are not recoverable under the grant. Only wage costs actually incurred are recoverable.  The employee must have been on the employer’s PAYE payroll on or before 23 September 2020 but they do not have to have been previously furloughed.  There is no maximum number of employees than can be claimed for by an employer.

If the Company is legally required to close entirely due to a local lockdown (for example, if they are a pub or gym), the Government will pay two thirds of their employees’ salaries up to a maximum of £2,100 per month.  In this circumstance, the employer will not be required to contribute towards wages and will be required to only cover NIC’s and pension contributions. The employees must be off work for a minimum of seven consecutive days to be able to claim this grant.

The Job Support Scheme will be open to all small and medium-sized companies (generally defined as less than 250 employees).  Larger companies will only be able to utilise the scheme if they are able to show their turnover has fallen during the pandemic and they are not making capital distributions.  We are awaiting clarification concerning as to how this will actually be financially assessed.

In utilising the Job Support Scheme, the employer will not be prevented from claiming the Job Retention bonus in January, if they meet the eligibility criteria.

Implementation

An employee can request to go on the scheme but an employer does not have to agree.  Otherwise, the employer will need to decide who should be placed on short-term working.

Employers will be required to negotiate a pay reduction with the employee, just as they did with furlough, and document the agreement in writing.  The agreement should cover: the reduced hours and working pattern, arrangements for moving out of the scheme if working hours fall below 33%, the reduction in pay and the payment of government contribution in relation to unworked hours.

We will look to update this page as and when more information becomes available.

Last updated: 15th October 2020.

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