24.09.2020
The Government has today (24 September) announced a new Job Support Scheme (JSS), which is intended to support businesses to continue employing people in “viable jobs”.
In his statement to Parliament, the Chancellor stated that there was no harder choice than the decision to end the furlough scheme, but emphasised that it would be fundamentally wrong to hold people in jobs that only exist in furlough. Instead, he said, it is necessary to support people in viable jobs that provide genuine security.
The Chancellor explained that, in March, when the Government ordered businesses to close, it set up the furlough scheme which paid people to stay at home and not work. Now, however, the landscape looks different as many businesses are operating safely and viably, although many are facing the different problems of uncertainty and a likely reduction in demand over the forthcoming winter months. Accordingly, there is now a need for the Government to support businesses to continue employing people in viable jobs and the JSS is the Government’s chosen tool to do this.
Under the JSS, employers facing depressed demand will be given financial support to retain employees in their jobs on short hours, rather than making them redundant. To ensure that the jobs supported are viable, to be eligible under the JSS employees will have to work at least a third of their normal hours and their employer will have to pay them as normal for those hours. The Government, together with employers, will then increase those people’s wages, cumulatively covering up to two thirds of the pay the employees would otherwise have lost due to the reduction of their normal working hours. The effect of this is that 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). The press release setting out initial information on the JSS specifies that the level of grant payable by the Government will be calculated based on employee’s usual salary, capped at £697.92 per month. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer. Further, it is the Government’s expectation that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
The Chancellor explained in his statement that this support would be targeted at businesses that need it the most. All small and medium size businesses will be eligible to claim under the JSS, but larger businesses will only be eligible if their turnover has fallen through the crisis. Subject to those requirements, the JSS will be open to all employers across the UK, including those who have not previously used the furlough scheme.
The JSS will run for six months, starting in November (i.e. after the furlough scheme has ended on 31 October), with employers able to begin making claims online in December. Employers retaining staff on shorter hours will be able to claim both the JSS and the Coronavirus Job Retention Bonus which was announced as part of the Government’s ‘Plan for Jobs’ in July. Ongoing support for the self-employed will also be made available on similar terms.
The factsheet setting out limited further details of the JSS states that employees must have been on their employer’s PAYE payroll on or before 23 September 2020 in order to be eligible. Employees will be able to cycle on and off the JSS and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days. Employers will be required to agree any new short-time working arrangements with their staff, make any changes to the employment contract by agreement and notify the employee in writing. This agreement must be made available to HMRC on request.
Indeed, the factsheet makes clear that HMRC will check claims and payments may be withheld or have to be repaid if a claim is found to be fraudulent or based on incorrect information. As with the furlough scheme, JSS grants can only be used as reimbursement for wage costs actually incurred.
With regard to restrictions on the use of the JSS, the factsheet also specifies that it is the Government’s “expectation” that large companies will not make capital distributions, such as dividend payments or share buybacks, while they are in receipt of funding under the JSS.
In addition, an employer will not be permitted to make redundant or issue notice of redundancy to an employee during any period within which it is claiming support under the JSS for that employee.
How we can help
We expect further information on the JSS to be published in guidance shortly and we will update members further when this is available. In this regard, we also note the Chancellor’s statement that additional details on the operation of the JSS will be worked out with businesses and unions over the next few weeks, as was the case at the inception of the furlough scheme. Our Policy team will continue to work closely with Government to ensure that the interests of manufacturers are represented and we will keep members updated on any developments.
The Coronavirus FAQs on our website are also updated regularly and provide detailed guidance on furlough, self-isolation and other issues relating to Covid-19. If you are a Make UK member, please contact your adviser with any queries you wish to discuss. Alternatively, non-members are welcome to call us on 0808 168 5874, or email [email protected].