The new Job Support Scheme – what we know so far
29 September 2020
The Chancellor of the Exchequer Rishi Sunak was always adamant that he would not be extending the Coronavirus Job Retention Scheme (CJRS), otherwise known as the furlough scheme, beyond its planned end date of 31 October 2020. However, with the virus continuing to spread and many workplaces still significantly affected, he has devised a new scheme, the Job Support Scheme, to start on 1 November 2020, immediately after furlough ends. Full guidance is awaited, but in the meantime here are the key points that we know so far:
The scheme is only available where employees are doing some work
Under the furlough scheme, although flexible furlough was an option, it was also possible for employees to be completely furloughed from work. However, employers will only be able to claim under the Job Support Scheme if their employees are doing at least one third of their normal working hours. The Government has said that it may increase the minimum proportion of hours over the life of the scheme. It is thought that ‘normal working hours’ will be calculated similarly to the furlough scheme.
This is a significant difference and is likely to raise questions about what will happen to employees who have been furloughed for health or childcare reasons.
There is no requirement for employees to have been furloughed previously
Under the CJRS there was a cut-off date beyond which no new employees could be furloughed (other than for a few exceptions). With the new scheme, there is a fresh start and employers can bring new employees into the scheme, provided that those employees were on its payroll on or before 23 September 2020.
The Job Support Scheme is envisaged to be flexible and therefore employees should be able to be put on and off the scheme as needs change.
The Government will contribute one third of the cost of the unworked hours (up to a cap)
The idea is that the burden is shared – so the employee will take a wage cut, the employer will make a contribution, and the Government will also make a contribution.
For hours worked, the employee should be paid by the employer as normal. For every hour of their normal hours that the employee doesn’t work, both the Government and employer will pay a third each of the employee’s usual hourly rate. The Government’s maximum contribution will be 22% and this is also capped at £697.92 a month.
From the employee’s point of view, they will receive up to 77% of their wages (depending on their working hours, pay and the cap) so a slight reduction from the 80% (also capped) that applied under the CJRS.
The Government’s factsheet contains the following table:
|Hours Employee Worked||33%||40%||50%||60%||70%|
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||78%||80%||83%||87%||90%|
|Gov’t Grant (% of normal wages)||22%||20%||17%||13%||10%|
|Employer Cost (% normal wages)||55%||60%||67%||73%||80%|
Employers cannot claim notice pay under this scheme
As we have covered in our previous articles, it is possible for an employee to be made redundant during furlough and for the employer to claim under the CJRS for weeks in which the employee was serving their notice period. However, that will not be the case under the Job Support Scheme as the Government has specifically said that the scheme will not cover this. It will not be possible for someone to be made redundant whilst their employer is making a claim under the Job Support Scheme – if there is a redundancy situation then it seems that the relevant employees would need to be taken out of the scheme first.
A written agreement with each employee will be required
As was the case with furlough, the Government envisages that employers will enter into written agreements with employees setting out the terms that will apply.
The scheme will run for six months
The Government has already stated that the scheme will run from 1 November 2020 through to 30 April 2021. That means that the scheme period will include January 2021 which is the date on which eligible employers will be entitled to the Job Retention Bonus. As you may recall, the bonus will be payable to employers who previously put someone on furlough but brought them back and continued to employ them up to and including 31 January 2021. The bonus amounts to £1,000 per employee.
The scheme is mainly aimed at SMEs
Any small or medium sized business will be able to claim under the scheme – there are no particular sectors included or excluded. When it comes to larger businesses, they will only be eligible for the scheme if they can show that their business has been adversely affected by the pandemic and, for example, they would not be expected to declare a dividend to shareholders whilst also claiming under the scheme. Further information is awaited as to how this rule will work in practice.
The scheme is aimed at trying to preserve viable jobs with a contribution to tide people over until conditions improve. However, unfortunately we suspect that many employers will either not have sufficient hours for the employee to qualify for the scheme, or they will decide that instead of paying 55% of an employee’s normal pay in exchange for only 33% of the work, they would prefer to look at redundancies.
If you are an employer dealing with issues arising from the coronavirus pandemic, then we can help. Please call us on 01243 836840 for a no obligation chat, or email us at [email protected].