22 Oct 2020

Employment

Advice for employers as changes to Job Support Scheme are announced

With a two-week lockdown in Wales about to begin, various regions in England now classed as Tier 3 and the furlough scheme coming to a close at the end of this month, it is a challenging time for many employers, with significant uncertainty around meeting the costs of employing staff.

As the Chancellor announces the latest update to the new Job Support Scheme, many employers still have some tough decisions to make. Our head of employment law, Daniel Wilde, gives his advice here:

“The furlough scheme obviously provided some very welcome support for both employers and employees during the Covid-19 pandemic. This unprecedented level of Government support enabled many businesses to survive the crisis over the spring and summer and, importantly, significant numbers of employees to keep their heads above water despite suddenly finding themselves with no work.

“It was clear to all that the furlough scheme couldn’t go on indefinitely but the Government put in place plans to replace it with a new Job Support Scheme (JSS) that will run from 1 November until the end of April 2021. Essentially, the employer will pay the employee when they are in work and the Government and employer will jointly subsidise the time when the employee is not working.

“Since it was announced two weeks ago, however, the JSS has been met with ongoing criticism that it would not be enough to support struggling businesses that either could not operate or have a significant reduction in trading due to coronavirus restrictions. The Government has responded today by making significant extensions to the scheme. “The newly-revised JSS will provide more generous, ongoing salary support to protect jobs during periods of lower demand. For affected businesses, the employer contribution has been cut significantly – from 33% of the employee’s wages, to just 5% – and the Government‘s contribution cap has increased to 62% of hours not worked, going up from the £697.92 that was originally announced, to £1,541.75 per month.

“The minimum working hours required to access the scheme has also been reduced to 20%, which means that employees working as little as one day a week are now eligible.

Assuming an employee works 20% of their normal working hours, the employer will have to pay 24% of wages plus national insurance and employers’ pension contributions and the Government will subsidise 49% of the employee’s wages, meaning that the employee’s earnings might fall by 27%.

This amended scheme is in addition to the additional subsidy arrangements agreed where businesses are told to close by virtue of Tier 3 or the Wales Firebreak lockdowns. Under this extension to the Job Support Scheme, where an employee cannot work due to a business being closed due to the restrictions, the Government will subsidise 67% of employee wages up to a maximum sum of £2100.

“These changes have been welcomed by businesses such as pubs, restaurants, non-essential retail and hairdressers that are forced to close, and also those that are legally allowed to remain open but whose trade may dwindle in consequence of the rules with some tough times ahead.

“For any employers who are considering participating in the JSS, they need to remember that they have no automatic right to reduce pay and any reduction in pay will constitute a variation in an employee’s terms and conditions and so will have to be agreed in writing. Employers will have to be able to produce written agreements confirming an employee’s agreement to these changes, if requested by HMRC.

“Although we believe this latest extension to the scheme will help many employers, particularly in the hospitality industry, significant redundancies are, unfortunately, probably still inevitable.”

“While this will help to ease the blow of having to close their doors to customers, the future still looks very uncertain for many of these establishments. Further for staff who are entitled to be paid and where there is no lay off clause in the contract of employment, businesses may have to pay staff without any support from the Government.

“If you are an employer facing these tough decisions, you will undoubtedly have a lot of questions. I’ve tried to cover the most common ones here but as ever, please get in touch for more detailed advice.

Q: If I sign up to the new JSS, will it prevent me from making any redundancies if I need to?

A: It does not appear that there will be any ban on making redundancies for the whole six months of the JSS. If you need to make anyone redundant before the scheme closes, it seems that you would be able to move that employee out of the scheme and stop claiming the grant for them. However, you cannot claim the grant during an employee’s period of notice.

Q: Some of my employees are unable to work from home but, for various reasons, are not willing to return to the workplace. What should I do?

A: If you have taken all reasonably practicable steps to ensure the workplace is Covid-secure and reduce the risk to workers, and the employee is still unwilling to return, you could consider a period of unpaid leave as an alternative to some form of disciplinary action.

Remember that you owe a duty of care towards any vulnerable employees and Government guidance states that this may involve taking ‘extra’ care. Failure to enforce additional precautions could result in a claim for negligence.

If you have employees who are not ill, vulnerable or in any special category, but are still unwilling to come back to work even though they cannot work from home, you could potentially take disciplinary action but we would caution against doing this in most cases as any dismissal could be regarded by an employment tribunal as unfair and disproportionate in the current situation, and so could result in unfair dismissal claims.

Q: What about employees who are parents and are struggling with childcare with ongoing nursery and school closures?

A: With many schools having to ask specific classes and year groups to self-isolate as new cases of Covid are reported, childcare is likely to remain an issue for many working parents for some time.

Those employees who have no childcare available may apply for a period of unpaid parental leave if they are caring for a child under 18 to a maximum of four weeks per child. Employees also have a right to a reasonable amount of unpaid time off where it is necessary to deal with unexpected events involving their dependants, such as schools closing or not having access to grandparent care.

In the current circumstances, we expect Employment Tribunals to be sympathetic to employees who are genuinely struggling to find suitable childcare in the short term as this has been described by the prime minister as “an obvious barrier to their ability to go back to work”.

Q: With some employees, I just cannot see how I can continue their employment. What should I do?

A: For employees who cannot work from home and are not eligible for the new JSS, remaining on unpaid leave may become unsustainable. In these circumstances, it may be appropriate to consider redundancies.

If you require more detailed advice on any area of employment law, please contact Daniel Wilde on 01633 244233 or email wilded@hevans.com.

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