On 24 September in its ‘Winter Economic Plan’, the UK Government unveiled a new ‘Job Support Scheme’ which will operate from 1 November 2020 for six months. The Job Support Scheme (JSS) “is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help [employers] keep their employees attached to the workforce”. The JSS will replace the Job Retention (Furlough) Scheme which ceases on 31 October 2020.
The Chancellor of the Exchequer, in announcing the JSS, recognized that not all jobs ‘can be saved’ as a result of long-term changes to the economy, which have accelerated during the pandemic. The JSS is therefore intended only to be utilized where employers believe that that there is a long-term future for the role. Where jobs are not ‘viable’ the UK Government’s view is that in the long-term it is better for employees whose jobs no longer exist to move into sectors where jobs are growing and retrain as required.
Which employers can use the JSS?
Small and medium sized employers can use the JSS without having to meet any financial tests; however, ‘larger employers’ will have to meet a financial assessment test and will only be able to participate if “turnover is lower now than before experiencing difficulties from Covid-19”. The UK Government’s “expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant”. Details of qualifying requirements will be set out in guidance and regulations which are yet to be published.
Employers need not have used the Job Retention Scheme to participate in the JSS. However:
(a) the employer must have a UK bank account and operate Pay As You Earn (withholding); and
(b) employees placed on JSS must have been employed by the employer on or before 23 September 2020 and been included in a ‘real time information’ submission to HMRC (the UK tax authority) on or before 23 September.
Employers who claim JSS will do so online from December 2020. HMRC will issue detailed registration and reporting requirements for JSS before it goes into operation.
How will the JSS work?
The employer must determine that the job is ‘viable’. Commentary so far suggests it is for the employer to make this determination but, if placed on JSS, the employee must actually perform their contracted work for the employer for at least one-third of their normal working time. The minimum hours requirement will be reviewed three months after the start of JSS.
Under the JSS, employees who work reduced hours of at least 1/3 of their normal working hours will be paid by the employer at their normal pay rate (salary) for the hours actually worked. For the remaining normal working hours which are not worked:
(a) the employer will pay 1/3 of the salary which would otherwise have been paid for the unworked hours;
(b) the government will reimburse the employer for 1/3 of the unworked hours, subject to a maximum reimbursable amount of £697.72 per month; and
(c) the employee will forego the remainder of their pay for hours not worked.
For example if an employee works for 50% of normal hours under JSS and their pay is £30,000 per annum (£2,500 per month)
1. The employer pays full pay for 50% of their time i.e. gross pay of £1250 per month;
2. For the unworked hours:
- the employer pays 1/3 of the pay which would have been received for the unworked normal hours that month i.e. £416.67;
- the government reimburses the employer 1/3 of the pay £416.67 (subject to the monthly cap); and
- the employee foregoes £416.67 for that month.
The total received by the employee under JSS is £2083.34.
The employer will also pay employers’ national insurance (social security) and pension contributions on the total amount paid to the employee.
An employee must agree to go onto JSS and agree in writing to a variation in their terms and conditions of employment. It will apparently be open to the employer and employee to agree that the JSS reduction will apply for limited or cyclical periods, e.g. an employee may go onto JSS for one month; go back to full time work and then cycle off again to JSS. Where an employee is on JSS the employer may wish to consider whether their employment contract is varied to allow them to work for other employers and/or to volunteer for the time when they are not at work under JSS.
HMRC may request copies of JSS agreements with individual employees. In addition HMRC indicates that it will contact employees on JSS, presumably to verify (as an anti-fraud measure) that details provided by the employer are correct.
The initial briefing note issued on 24 September states: “Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.” It would seem that if an employer, having put an employee on JSS, realises that the job is no longer ‘viable’ and redundancy is inevitable, it must bring the employee at least notionally back onto full hours and pay before initiating their redundancy and make any redundancy payments required by statute.
Are there any alternatives to JSS?
Employers may agree reduced hours and pay with employees without using the JSS; this may be more attractive than using the JSS for employers who cannot afford to utilise the JSS because of its cost structure. Where the employer believes that in a few months the business will recover it may agree the terms of an unpaid sabbatical or period of unpaid leave with employees. If there is no work and redundancy is inevitable the employer may wish to consider whether to agree to re-employ staff who are made redundant although the terms of any such agreement will need to be carefully considered.
If the job is no longer viable then redundancy (job elimination) may be the outcome. Where that is the case the employer should follow a fair procedure in implementing any redundancies.
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