Job Support Scheme: What we know so far

On 24 September 2020, the Government announced the Job Support Scheme, which will follow on from the expiration of the Job Retention Scheme. The Job Support Scheme is designed to protect viable jobs in business where they are facing lower demands over the winter months.

As of Friday 25 September 2020, very little guidance has been issued by the Government on the new scheme, but here is what we know so far:

• The scheme is available to all employers with a UK bank account and a UK PAYE scheme. It is open to employers who did not use the Job Retention Scheme as well as those who did.
• Large businesses will need to meet a financial assessment to show that their turnover has been adversely affected by the COVID-19 pandemic. SMEs will not have to meet the same financial assessment threshold.
• Employees must have been on the payroll on or before 23 September 2020.
• For at least the first 3 months of the scheme, the employee must work a minimum of 33% of their normal hours. After 3 months the Government will review this minimum hour’s threshold.
• Each short time working arrangement must cover a minimum period of 7 days.
• For every hour not worked by the employee, both the Government and the employer will pay a third each, and the employee will forego a third. The Government contribution will be capped at £697.92 per month.
• The employee must be paid their contractual wages for hours worked, and the Government and employer contributions for hours not worked.
• Grants will be made in arrears and will not cover Class 1 employer NICs or pension contributions. The employer will need to meet these costs.
• Employees cannot be made redundant or put on redundancy notice during the period within which the employer is claiming the grant for the employee.
• The scheme will be open from 1 November 2020 until the end of April 2021.

A worked example can be shown below

• Employee works 40% of their normal hours, leaving 60% unworked.
• The employer must pay the employee’s salary for the hours worked.
• The 60% unworked will be split equally between the Government, the employer and the employee:
  • Government pays 20%
  • Employer pays 60% (40% plus their share of 20%)
  • Employee foregoes 20%
• Total pay received by the employee is 80%.

Debenhams Ottaway’s thoughts

• This is unlikely to be a game changer for businesses which cannot operate at all due to the crisis, as it involves some cash burn, and restricts their ability to make redundancies.
• It may help retain some jobs in sectors and businesses which continue to operate but at reduced or ‘lumpy’ capacity such as manufacturing.
• The mechanics and difficulties around gaining employee agreement to this change, which will result in a loss of income, remain to be seen.
• There are calls to dovetail this scheme with re-skilling workers to utilise employee down-time.