The New Job Support Scheme
On 24th September, the Chancellor announced the broad outline of the new scheme intended to replace the current Coronavirus Job Retention Scheme, or ‘furlough scheme’ which is due to end at the end of October.
Rishi Sunak was moderately blunt, explaining that the government could not protect all jobs and that further intervention was aimed at securing ‘viable’ jobs. A quick reading of the outline of the new Job Support Scheme (JSS) makes it abundantly clear that this is what is intended. It is also clear that the Chancellor, presumably at the behest of Her Majesty’s Revenue and Customs, has added a number of qualifiers and caveats, designed we suspect to make the new scheme less attractive to those who might think to bend the rules slightly…
In broad terms, the JSS seeks to enable short time working whilst ensuring that employees are still able to earn sufficient wages to survive and companies receive some help with their payroll costs.
It is probably significant that the scheme is designed to run for six months – a measure perhaps of how much further disruption the Government is expecting from Covid-19.
Specifically, if an employee works two days per week instead of their normal five, their employer will pay them for those two days, and along with the Government contribute a third each of the remaining three days which are unworked. The missing third is contributed by the employee, so read that as unpaid. In essence, this is a version of the German KurzArbeit scheme which is designed to achieve similar ends. The UK contribution is capped at £697.92 per month.
To qualify an employee must feature on their employers Real Time Information (RTI) submission for the 23 September 2020, in other words, they must be demonstrably on the payroll at that date. The employer will calculate and pay wages based on the employee’s normal salary, not their furloughed salary, and they will also calculate and pay their additional contribution and the government’s portion. They will then claim the government’s contribution back monthly in arrears.
As mentioned there are a number of conditions that did not feature in the CJRS: large companies will have to meet a financial assessment test (SMEs do not have to do this); it is ‘expected’ that companies using the scheme will not be paying dividends, making capital distributions or engaging in share buyback schemes for the duration. Employees must be working a minimum of 33% of their contracted hours. In other words, the company genuinely needs help to survive and recover.
The outline makes it clear that employers will have to discuss and agree these new working arrangements with employees and notify their employees in writing. HMRC intend to inform employees directly that their employer has entered the JSS on their behalf, doubtless another move to ensure the probity of claims. Whilst on the scheme, employees cannot be made redundant nor put on notice of redundancy, unlike the current furlough system.
Since the Chancellor presented this new initiative only a few days ago, we await the detailed guidance that will come from the Treasury in due course, as ever the devil will be in the detail.
It is clear to us that the Government has learned a number of lessons from the CJRS and is seeking not only to refocus on jobs which can be saved but also to serve notice that they expect employers to abide squarely with the rules of the new scheme.
If you are considering taking advantage of the JSS, you will need the agreement of your employees in writing. If you would like advice on the appropriate terms and wording of such an agreement, please contact us to discuss this further.
On 9th October 2020, the Chancellor announced an expansion to the JSS, covering 2/3 of salary of employees who can’t work because their employer has been required to close for a period over the winter. Here’s the HMRC link with the basic information: https://www.gov.uk/government/news/job-support-scheme-expanded-to-firms-required-to-close-due-to-covid-restrictions