Changes to the government’s Job Support Scheme – a guide for employers

In September 2020, it was estimated that there are currently 9.6 million people on furlough from 1.2 million different employers. Many feared that the end of the furlough scheme would mean that employees faced a cliff edge as of 31 October and for many businesses the original successor – the Job Support Scheme (“JSS”) – was unlikely to see off the wade of imminent redundancies given the costs businesses would face in implementing the scheme. However, the government has since caved into pressure to revise and significantly expand its plans to support wages by electing to shift the financial cost to the public purse.

On Thursday 22 October, the Chancellor of the Exchequer announced the JSS Open and JSS Closed. For employers who continue to operate but face decreased demands, they can obtain support from JSS Open; whereas a business legally required to close as a direct result of coronavirus restrictions can obtain support from JSS Closed.

A summary of the applicable schemes:

To be eligible, employees are those who were on payroll between 6 April 2019 and 23 September 2020.  If employees ceased employment after 23 September and were subsequently rehired, then employers can claim for them. Unlike furlough, employees cannot be under redundancy notice or served with notice while in receipt of either the JSS Open or Closed.

The Schemes are available to all SMEs but additional eligibility criteria apply to employers with more than 250 employees, who would need to have undertaken a financial impact test.

Job Support Scheme Open

Employees must work a minimum of 20% of their “usual” hours. The government will then pay 61.67% of an employee’s normal wages for hours not worked. This is capped at £1,541.75 per month. The employer must then pay only 5% towards any unworked hours, capped at £125.

Employers must reach a written agreement with their employees that they have been offered a “temporary working agreement”. Inevitably this will involve staff consultation, which may be undertaken as part of a wider redundancy consultation process.

Job Support Scheme Closed

For many working in the entertainment and leisure industries with continuing coronavirus restrictions, the JSS Closed will provide support as employers simply will not have the funds in place to continue to pay wages on a forced shut-down. The JSS Closed provides employees affected by a forced closure with two-thirds of their wages, capped at £2,083.33 per month, for the time that employees are unable to work. Again, HMRC confirms that to be eligible for the grant, employers must have reached a written agreement with their employees that they have been instructed to and agree to stop working for a minimum of seven consecutive calendar days or more.

However, the current government factsheet confirms that the scheme will only cover businesses that, as a result of restrictions set by one or more of the four governments in the UK, are legally required to close their premises. This includes premises restricted to delivery or take-away services. But it is important to note that businesses required to close as a result of specific workplace outbreaks by local public health authorities are unlikely to be eligible for the JSS Closed.

Employee taxes and pension contributions

The employer remains responsible for NICs and pension contributions, unless the employee has opted out or stopped saving into their pension. Employers must also deduct income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.

It should also be noted that employers cannot agree to reduce wages below the amount claimed, even if this includes a salary sacrifice scheme, for example.

If you have any questions on the schemes outlined in the article, please contact our employment law specialists Asha Kumar, Angharad Harris and Nathan Donaldson.