25 Sep 2020

Employment

Furlough Mk2 – Government announces new Job Support Scheme

Many employers were fearing the end of the furlough scheme and with Covid re-emerging and more local lock downs, many commentators were predicting a winter of mass redundancies.

To address these issues, Rishi Sunak announced on 24th September, a new Job Support Scheme (“JSS”) to replace furlough effective from November 1 to run for six months.

“The company will pay its workers for the time they are in work,” Rishi Sunak said.

“And the Government and the employer jointly will subsidise the time that the worker is not working.”

The aim, of course, is to help UK employers ride out the continuing COVID-19 storm, and save jobs or when the current furlough scheme ends on 31 October. The JSS can be used by employers who have not previously accessed furlough and so can be applied to staff who have not previously been furloughed.

The JSS is targeted to support small and medium sized businesses. Larger companies will be able to access the scheme if their turnover has fallen although the threshold for the reduction in turnover and what constitutes a large company has not yet been published.

Rishi Sunak also stated that the Government will not continue to support non-viable jobs. This means that the JSS will only be available for employees who work at least one third of their normal hours. Employees on JSS can’t be made redundant/put on notice by the employer during a period when the employer intends to claim and so the JSS cannot subsidise the cost of notice pay.

Assuming an employee works at least one third of their normal hours, the employer will for the hours that are worked and for the hours not worked workers will be paid two thirds of their salary for the hours they can’t work split equally between the employer and the Government. The Government‘s contribution will be capped at £697.92. Despite the announcements about the JSS supporting jobs, the Scheme is far less generous than the furlough scheme with the Government only supporting up to 22% of an employee’s wages capped a £697.92 per month. It is not yet clear whether the employer can cap their pay for the hours not worked by the employee for higher paid staff.

Although, the JSS can operate flexibly, the JSS will still constitute a variation in an employees’ terms and conditions and will have to be agreed in writing. Employers will have to be able to produce written agreements, if requested by HMRC. Again, the detail of the JSS will need to be examined and the Government has also indicated that after 3 months it will consider whether to increase this minimum hours’ threshold. Although we think this will support some employers retain jobs, we still anticipate that many employers will be reluctant to support 33% of employees’ wages and that large scale redundancies are probably still inevitable.

As always, if you require more detailed advice, please do not hesitate to contact Daniel Wilde by emailing wilded@hevans.com or by calling 01633 244233.

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