9th October 2020

The Job Support Scheme

With the expiration of the Job Retention Scheme (“JRS”) fast approaching on 31 October 2020, there has been much debate as to whether there would be a further extension to the JRS or if an additional scheme would be announced. The Chancellor of the Exchequer, Rishi Sunak, recently released his plans for the Job Support Scheme (”JSS”) which will run from 1 November 2020 to the end of April 2021.

How will it work?

JSS is designed to protect jobs in a business that is declining in demand due to the ongoing Coronavirus pandemic, over the winter months. The business will continue to employ the employee and pay them for the time worked. However, where not all contractual hours can be fulfilled, the burden of paying for these hours will be split between the Government, the employer and the employee. The employee’s sacrifice will be in the form of a wage reduction but it allows them to remain employed. The employee must work at least 33% of their normal hours. With the remaining unworked hours, the Government will contribute towards a third of employees’ usual hours at their normal contracted wage (as opposed to any previous furlough pay), capped at £697.92 per month. The employer requires to pay a third of the wages also, leaving a third unpaid. The calculation for ‘usual hours’ will be similar to the JRS however, we await further guidance to see exactly how this will apply.

The scheme ensures that employees will earn a minimum of 77% of their normal wages (where the Government contribution has not been capped). The scheme is designed to help viable businesses stay afloat whilst protecting jobs and therefore an employee cannot be made redundant or put on notice for redundancy whilst the employer is claiming through the JSS for that employee.

Who is eligible?

Similar to the JRS, the scheme will be open to any employer with a UK bank account and UK PAYE scheme. It applies to any employee who was on the payroll on or before 23 September 2020. Additionally, the employee must work at least 33% of their usual hours within the first three months of the scheme. The Government may increase this threshold after 3 months. Employers will be able to rotate employees on and off the scheme and they do not need to work the same shift pattern each month. However, each short-time working arrangement must cover a minimum period of 7 days. Importantly, the employer and employee do not require to have utilised the JRS previously and, where they have been a JRS participant, they will still be able to apply for the JRS bonus (£1,000 per employee) in January 2021.

Unlike the JRS, not all businesses will qualify. For large businesses, there will be a financial test whereby they must prove that their turnover is now lower as a result of COVID-19. Further guidance is expected shortly on this test.

Do employees need to agree?

Employers will need their employees to agree to the new short-time working arrangements and put something in writing to this effect. HM Revenue & Customs may request to see a written agreement so it is important that employers do this. We await further guidance from the Government in order to establish what exactly needs to be covered in the agreement but at a minimum we expect it should cover the new working hours and how the employee’s pay will be topped up for the duration of the scheme. Employers should try to engage in a meeting with the affected employees and discuss the changes to their contracts and reach agreement about this. It is hoped, in the current climate, that employees will be understanding of the reduced services and hours available and therefore be willing to reason with employers.

Will the scheme work?

The scheme is certainly welcome; however, we await further guidance to see the full scope of the scheme and judge its effectiveness. Sadly, there will be many employers who will be unable to afford the employer ‘top up’ requirements and therefore will be unable to qualify. Additionally, whilst the redundancy provisions will provide additional protection to employees whilst on the scheme, employers will not be able to claim payments towards notice pay from the scheme, unlike the JRS. Ultimately, employers may need to consider alternative options, such as, amending contracted hours and pay in order to sustain their business. However, detailed guidance on the JSS is expected shortly to clarify the terms. If you require any assistance in the meantime, please contact the Employment Team to discuss.

Fiona Knox, Trainee Solicitor
Employment Law
Blackadders LLP
@EmpLawyerFiona

www.blackadders.co.uk

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