On 24 September, the Government announced the introduction of a new Job Support Scheme (JSS), which will be available to eligible employers from 1 November. According to the initial announcement, press release and factsheet, the new scheme aims to protect ‘viable jobs’ in businesses which are ‘facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce’.
Where an eligible employer claims under the scheme, ‘the company will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job’. Further guidance about the operation of the scheme is expected shortly.
In light of this recent announcement, will the new JSS help your business get through the winter? Below, we look at some issues to start thinking about.
Are you eligible?
Whether the JSS is for you is of course about more than whether or not you are eligible for the scheme; it is also about whether the scheme actually benefits you and your employees. We look at this in more detail below.
What are the benefits of using the JSS?
It goes without saying that the introduction of the JSS has significant scope to benefit any employees who otherwise might be at risk of losing their jobs. There are also various potential benefits to employers of using the JSS and no doubt many employers will be supportive of the idea of cutting hours rather than jobs to support the economy in the context of the Covid-19 pandemic, particularly if this fits well with their culture of corporate social responsibility. In addition, using the scheme may allow employers to:
- avoid the immediate costs of making redundancies (in particular, redundancy and notice payments);
- retain a staff base which is available and ready to increase their hours if and when customer demand picks up (rather than the employer having to incur the time and costs of recruitment later on);
- stay flexible in responding to fluctuating demand, as employers will be able to move employees on and off the JSS and they will not be required to work the same pattern each week (for example, if one month is quiet, we assume that employees could agree with employees - subject to the rules of the scheme - to work the minimum 33% of hours required, whereas if the next month is busier, this could be increased as needed); and
- safeguard their earlier investments by retaining qualified and experienced staff who the business may have trained and invested in.
Will the JSS work for you?
If your business is eligible under the JSS, you will need to give careful thought to the operational implications of using the scheme, as these will vary depending on your current business circumstances. You may wish to consider the following:
- Remind yourself how many people you currently have on full furlough and/or flexible furlough. Doubtless you have a plan for what will happen to any individuals who are furloughed or flexibly-furloughed once the furlough scheme comes to an end on 31 October – so now you need to consider how the new JSS impacts those original plans.
- From a practical perspective, do you have enough work available for applicable employees over the next few months? Under the JSS, employees will need to work at least one-third of their pre-Covid usual hours and their employer will have to pay them as normal for those hours. (Also note that the Government has said that, after the first three months, it will consider whether to increase this minimum hours threshold and so this could become more onerous; employers will need to stay on top of the relevant guidance.)
- What will be the financial cost to your business of using the JSS? In addition to paying the employer for the actual hours worked (at least one-third of the usual hours), the employer will need to contribute towards the hours not worked. The burden of hours not worked will be split between the employer and the Government (through the JSS grant) and the employee (through a wage reduction). It is clear that the JSS is less generous for both employers and employees than the furlough scheme, and there are likely to be additional costs to employers of keeping employees on the JSS, rather than making them redundant. For example, it may cost an employer less to keep one or two employees on full hours and make others redundant, than to reduce the hours of these employees and claim under the JSS for all of them.
- If prior to the Government’s announcement you had been contemplating redundancies, or are currently in the midst of making redundancies, careful financial modelling will be needed to assess the cost and practical implications of using the new scheme as an alternative to some, or all, proposed redundancies (see ‘What if you are currently facing a redundancy situation?’ below).
- Note that, based on what we know of the JSS so far, an employer will not be permitted to make redundant, or issue notice of redundancy to, any employee during any period within which it is claiming support under the JSS for that employee.
- Finally, businesses are eligible even if they have not used the furlough scheme before; therefore even if you do not currently have employees on furlough or flexible furlough, you might want to consider changing your normal operations to enable you to claim under the JSS. This means businesses which envisage lower customer demand over the coming months may well take the decision to claim for ‘viable jobs’ under the JSS as part of a general cost-cutting exercise.
What to tell employees at this stage?
What if you are currently facing a redundancy situation?
It is possible that, having undertaken a detailed analysis of your business’ individual circumstances (and sought legal advice as needed), you might conclude that the introduction of the JSS does not change the outcome of the original redundancy plans. For example, accessing the JSS in order to ‘share the pain’ of reduced working amongst a wider group of affected employees may not be an attractive option where your redundancy plans are advanced (particularly if you have already told some employees that they are ‘safe’).
How we can help
Once further information is available from the Government, we will create various template documents to help employers bring employees onto the JSS and some JSS-focused FAQs.