Latest update following recent announcements
As we come towards the end of the furlough scheme, we have all been waiting to see what the Chancellor was going to do to prevent a large round of redundancies for those sectors still badly affected by a significant loss of income. This update sets out the Chancellor’s latest job support measures. With the Coronavirus Job Retention Scheme definitely being withdrawn, Rishi Sunak has announced its ‘replacement’ with the Job Support Scheme (“JSS”).
Job Support Scheme
The JSS is “designed to protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19, to help keep their employees attached to the workforce.”
The effect of the JSS is that the government will subsidise the wages of employees, where there is not full time work available for them at the current time. This will be done by splitting the wage burden for the “unworked” element between the government, the employer and the employee. The government has stated that it will pay up to one third of the wage bill for hours not worked (up to a cap of £697.92 per calendar month), with the employer paying a further third and the employee bearing the cost of the remaining third. Employers will continue to pay full pay for the hours worked, and employees must work at least a third of their normal contracted hours. The government states that this means that “employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped”.
There are several elements that remain subject to clarification as follows:
- Whether the employer can top up the employee’s salary or not.
- For the “unworked” portion paid by the employer, whether this is at the normal pay rate or is similarly capped at £697 as for the Government’s contribution.
- Whether the payment from the Government is subject to PAYE, NI and is pensionable. It is assumed to be so currently.
Another important point to note is that claims cannot be made until after the employee has been paid and an RTI report made which means the business has to be able to meet the full payroll cost, at least in the short term.
The scheme opens on 1 November 2020.
Confused with how to calculate this? We were too! At face value, whilst sounding helpful we think that there are some significant limitations with the new scheme and the assistance to employers may well not be enough to prevent redundancies where there is insufficient work to keep staff fully employed. So, being ever resourceful, we have built a model which allows us to help employers work out the effect of the JSS, based on our current understanding.
If you would like more information about the JSS, and to understand how it works in practise, please do send us an email or call us and we would be pleased to help.
For more information
For more information about the new Job Support Scheme, please contact us on: