In response to increasing pressure on the Government to continue support beyond 31 October 2020 and the winding up of the Coronavirus Job Retention Scheme, the Chancellor yesterday announced basic details of the latest scheme to try and help employers and employees manage the ongoing challenges of Covid. While many will have concerns about the cost of a new scheme when the predicted cost of the Retention Scheme is £60bn, at a time when Covid infection rates are increasing and a lot of employers have either started redundancy exercises or are gearing up to do that before 31 October, any help that can be provided to try and help the economy survive is welcome.
As a variation of the existing scheme but retaining the same aim of sharing the cost burden of keeping people employed, the new Job Support Scheme (JSS) aims to subsidise the cost of paying employees who are working but are not fully occupied and doing less than their normal hours because of the impact of Covid.
JSS will start on 1 November 2020 immediately after furlough ends and will run for 6 months until 30 April 2021.
The main terms provide :-
- Any employee must do at least 1/3rd of their normal hours to qualify. If they can’t do that, JSS will not apply.
- Like flexi-furlough, employers will pay those employees in full for those hours that they actually work.
- For the balance of normal hours which are not worked, the burden is shared equally by the Government (they pay 1/3rd of the cost of non-working hours), the employer (they pay 1/3rd) and the employee (who does not get paid for 1/3rd of those hours but does at least have a job rather than being made redundant).
- A cap of £697.92 per month applies to the grant and that is as much as can be claimed for each employee. JSS means the Government pays a maximum of 22% of an employee’s salary (when furlough started it was 80%).
- Following the arrangements which have applied recently under furlough, grants will not cover Class 1 employer NIC or pension contributions and they remain payable by the employer.
- Similar to furlough, working arrangements need to be in blocks which last for a minimum of 7 days (provides flexibility but avoids an administrative burden from frequent changes).
- JSS can be used by employers even if they did not use furlough.
- Employers with up to 250 employees can use JSS; above that level evidence of reduced turnover due to Covid is required.
- Employees must not already be on a redundancy notice. Employers who have already gone through a redundancy exercise and declared redundancies are not able to claim.
Full details of the scheme will be available shortly to allow employers to plan for the November launch. One obvious area where further information is required relates to payment of employees and workers on variable hours and guidance will be needed as to how to calculate what they can be paid and what they need to work given that the scheme is based on “normal hours”.
One obvious issue which needs to be stressed is that JSS will not avoid redundancies for employees who are currently furloughed and have no work to do. Those employees will not qualify as they will not meet the basic threshold of doing 1/3rd of their hours and this has already been highlighted by various sectors of the economy who are struggling during the pandemic and looking for Government support.
If you have any questions on any of the issues mentioned in the above article, please contact Russell Eadie.