Behind the headlines: Job Support Scheme

It’s been another busy week of new guidance, measures and plans to support employers, to help stabilise the economy over the coming months. As part of these new plans, earlier this week the Chancellor announced the launch of the new Job Support Scheme.

Here’s what you need to know:

The background

The Job Support Scheme is a UK-wide initiative designed to protect ‘viable jobs’ in businesses who are facing lower demand over the winter months due to Covid-19 (1).

This is set to replace the furlough scheme from 1st November this year until 30th April; a scheme that was a temporary measure to support businesses and has proved to be a critical ‘safety net for millions during the pandemic’ but has, of course, kept some employees in roles that only continued to exist because of the grant (2). The Job Support Scheme will therefore help to prevent workers in ‘viable jobs’ from being made redundant over the winter months by working shorter hours.

This is running alongside the Kickstart Scheme and Job Retention Bonus Scheme.

The details

According to The Guardian, employees must work at least a third of their normal hours and be paid as normal for what they work. When working 33% of their ‘usual’ hours, employees will receive 77% of their full-time pay and will be able to keep their jobs (2).

Companies will then continue to pay their employees for time worked, but the burden of hours not worked will be split between the employer and the government (through wage support) and the employee (through a wage reduction). This means that for the remaining 2/3 of the employees ‘usual’ hours, the employer pays 22%, the government pays 22% and the employee forfeits 22%. The cost of National Insurance and pension contributions are not covered this time around. 

That means for an employee working ⅓ of their hours (and that’s the minimum permitted for the first three months of the scheme), the employer pays their full contractual pay for those hours so overall would be funding 55% of the employee’s normal wage across the worked and un-worked hours.

Eligibility is automatic for SME businesses – those with less than 250 employees we assume using the connected company rules. This therefore includes all single director schemes. Larger businesses must prove they have been ‘adversely affected’ by completing a ‘financial assessment test’ and should not be paying a dividend whilst claiming under the scheme.

To qualify for the scheme, employees must have been on an FPS sent by midnight on 23rd September, but are not required to have been furloughed previously. Short-time working agreements must also be made in writing in the same way as furlough agreements and must last at last 7 days as a minimum.

The grant is capped at a maximum of £697.92 per month and will be reimbursed in arrears, so November monthly paid claims won’t be paid until the end of December and there is only a monthly claim whatever the pay frequency. Guidance is still yet to be provided on the reference period and calculation for wages and hours.

The impact

Whilst this new scheme may be a welcome initiative (particularly for SME businesses), of course our profession is looked to again to make sense of it all in practice. And it’s not completely straightforward.

Firstly, the Job Support Scheme will run until 30th April 2021, meaning it will cross into a new tax year and therefore likely cause complications.

Secondly, employees must work and be paid in full by their employers for a third of their ‘usual’ hours. When you read this above I’m sure the first question on your mind was the same as mine: ‘what does ‘usual’ mean?’ Quite often the government seemingly forgets the myriad of ways in which people work and are paid in the modern world and currently we don’t yet know how ‘usual’ is to be calculated for the first three months. Perhaps the ‘usual’ hours are those worked on average to date during the pandemic, but who knows! After three months the government will also consider whether to increase the minimum hours threshold.

And finally, employees can’t be in their notice period for redundancy, so this means the employer has to guarantee not to start notice for redundancy until May next year. Now does that seem wholly viable to you?

My heart goes out to you all. I know we had our minds set on 31st October when the furlough scheme would come to an end and we could all breathe a sigh of relief. Now that has been taken away from us. Our profession has worked so tirelessly throughout the pandemic as the vital goalkeepers to keep businesses in play. The stage managers who ensure the show continues to go on. I hope one day this doesn’t go unnoticed.

Sources

(1) Job Support Scheme Factsheet

(2) Am I eligible for the job support scheme? How to apply for Rishi Sunak’s new plan

(3) Chancellor unveils new Job Support Scheme and extends self-employed grant