Behind the headlines: Job Support Scheme expansion

 

Since my last blog on the Job Support Scheme, the government have announced a temporary expansion to this initiative to support UK businesses who have been legally required to close as a result of Covid-19. 

This week’s blog therefore focuses on the details of the scheme’s temporary expansion.

Here’s what you need to know:

The details

The Job Support Scheme (JSS) begins from 1st November for six months and is set to be reviewed in January. You can find an overview of the scheme in my recent blog here.

The temporary expansion of the scheme will help eligible businesses by covering the wage costs of employees who are required to cease work. The aim is to help protect employee incomes and limit unemployment.

To qualify for the scheme, employers must have:

  • a UK bank account and registered UK PAYE scheme on or before 23rd September 2020 (meaning an RTI submission must have been made on or before this date).
  • been legally required to close their premises due to Covid-19 in England, Wales, Scotland or Northern Ireland. This includes businesses who have been limited to delivery or collection only services from their premises.
  • been required to cease work for a minimum of seven consecutive calendar days.

The scheme will pay employers a grant calculated based on the number of employees required to cease work – employers can only use the scheme for employees who cannot work.

The new rules indicate that, similar to the wider JSS, ‘where employees receive two-thirds of their wages for time not worked, the grant per eligible employee is two-thirds of their normal pay up to a limit of £2100 per month’ (1). More information on how this is calculated will be set out in the guidance.

Like the wider scheme, ‘the grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer’ (1), and will be paid in arrears from December.

When premises re-open, businesses can claim under the wider JSS if they face reduced demand under the criteria set out here.

Employers will still be able to claim the Job Retention Bonus for employees, provided they are eligible and have previously been part of the Coronavirus Job Retention Scheme. To be eligible for either regime of the expanded Job Support Scheme however, the employer and/or employee do not need to have previously used the Coronavirus Job Retention Scheme, but simply need to have been included in a Full Payment Submission sent by midnight on 23rd September 2020.

It will be possible to make a claim for the grant via GOV.UK from early December 2020.

The impact

Of course, as usual, the response is mixed. Mike Cherry, Chairman of the Federation of Small Businesses, Carloyn Fairbairn, Director General of the CBI, and Dr Roger Parker, Director of Policy at the IoD, have all welcomed the additional support for businesses to weather the winter months. It is felt that these new measures will particularly help to protect employees whose jobs may be at risk due to local lockdowns or tougher restrictions.

However, Dave Innes, Head of Economics at the Joseph Rowntree Foundation, warns that the scheme ‘is still not generous enough to protect jobs in hard-hit sectors in non-locked-down areas’ (2). Some critics have highlighted the scheme doesn’t go far enough to support businesses affected by the impact of reduced supply chains, due to other businesses being legally required to close their premises.

Others have indicated that the extended scheme doesn’t effectively protect and work for all kinds of workers, including self-employed and temporary workers. Sophie Wingfield, Director of Policy at the Recruitment and Employment Confederation, highlights that we can’t let this happen again as it ‘took too long to establish in the original furlough scheme’ (2).

It’s a tough call, as the government has no magic money tree even though its actions have had to give that impression for the last few months, and the more generous schemes are now, the longer and more painful will be the systemic changes to the tax system needed to balance the books. I don’t see the original JSS as being widely taken up, given the simple cost dynamics of employers paying 55% plus on-costs for 33% of hours, and a £1,000 bonus will not balance the books, but rather make for more painful choices as to how hours are allocated. Employers would be better off renegotiating contracts to reduce hours to meet reduced demand. Whilst in normal times that risks the loss of loyal staff, these aren’t normal times as there aren’t other roles to go to. The ‘closure JSS’ will offer more a quick fix sticking plaster, but what will the effective introduction date be given that some premises have never reopened (theatres, nightclubs etc) and in Leicester our local lockdown started over 100 days ago? The one certainty is we need some detail on both schemes this week, as businesses are already haemorrhaging jobs.     

Sources

  1. Job Support Scheme Expansion for Closed Business Premises
  2. Job Support Scheme expanded to support businesses required to close due to coronavirus restrictions