Employment Law Bulletin 8

Job Support Scheme

With the Coronavirus Job Retention Scheme (‘CJRS’) due to end on 31 October 2020, the Government has been facing increasing pressure to provide some alternatives or an extension to the scheme in order to support businesses/employees and avoid a wave of redundancies.

The Chancellor announced the successor to the CJRS in the form of the Job Support Scheme (‘JSS’) which will be in place for 6 months from 1 November 2020.  It is certainly not as generous as the CJRS, with the Government expecting employers to pick up a larger percentage of their employees’ wages, with a scheme intended to cover only ‘viable’ jobs.  In doing this, the Government are accepting that not all those employees currently covered by the CJRS are going to be eligible for further support from November.

Employers can use this scheme to avoid redundancies by keeping their employees on shorter hours and with the Government supporting employers to help pay their wages during this period.

How does the JSS work?

The JSS will require employees to work a minimum of 33% of their usual hours.

Employers will be required to pay employees for the hours that they work as per usual.

For hours that the employee does not work (the remaining 67% in the example above), the government, the employer and the employee will pay one third each.

For example, for employees working 33% of their usual hours, the employer will overall contribute 55% of the employee’s usual salary (33% plus 1/3 of 67%) and the government will contribute a further 22%.  This will leave an employee working 33% of their usual hours being paid 77% of their usual salary.  This 77% represents a minimum amount that an employee should receive (when no cap applies – see below) and will increase as the hours worked increase.

The contribution made by the Government will also be capped at £697.92 per month and it will not cover Class 1 employer contributions to National Insurance or Employer Pension Contributions.

The scheme will run from 1 November 2020 for 6 months and will be open to all employers (non-sector specific) who have a UK bank account and UK PAYE Scheme.  All SMEs (< 250 employees) will be eligible, with larger businesses only eligible if they can show that their business has been adversely affected by COVID-19 and that they will not be making capital distributions (dividends etc).  Larger employers are likely to have to pass a ‘financial impact’ test with more details on this to be released in due course.

The scheme does not require employees to have previously been furloughed under the CJRS, but to be eligible they will need to have been included on their employers Real Time Information (RTI) submission to HMRC on or before 23 September 2020.

Importantly, the JSS states that employees cannot be made redundant during a period on which their employer is claiming a grant under the scheme.  However, this does not appear to mean that employees cannot be made redundant at all or be put on notice during the six months that the scheme is running, but rather that employers will be unable to use the scheme to effectively fund part of the employees notice period.  

Practically speaking, employers will be required to move an employee out of the scheme if they wish to start a redundancy process prior to the scheme ending.    Under the CJRS an employer was able to use the scheme to fund all or part of the redundancy notice payment, but this will not be possible under the JSS.

Currently the threshold for the minimum hours to be worked by employees is 33%, but the government’s factsheet suggests that this may increase in months 4-6 (from February 2021 onwards). 

Further guidance is due to be issued on whether employers can use the scheme if they are unable to guarantee 33% of hours each week or whether this can be stretched to cover an average figure over the whole month.  We do know that employees do not need to be working the same pattern each month and that employees can be ‘cycled’ on and off the scheme.

This scheme has raised questions on whether specific sectors that have yet to get back on their feet will be able to benefit, as in some sectors it may not be possible to provide 33% of an employee’s hours each week. It may therefore be possible that the Government will look to introduce sector specific support as is necessary to stop larger scale redundancies in areas such as hospitality and travel where this scheme may be seen as falling short.

If you have a question regarding the Job Support Scheme or require legal assistance with an employment law matter take advantage of our complimentary initial consultation with one of our legal experts by calling 0800 999 4437 or emailing enquiries@parfittcresswell.com today to reserve your place.