Covid 19: The new Job Support Scheme

The Chancellor has unveiled a new wage subsidy scheme aimed at minimising further unemployment.  The announcement follows the Prime Minister’s statement on 22 September 2020 in which further restrictions were imposed on businesses, in response to the dramatic rise in coronavirus cases.  Today’s announcement of the Job Support Scheme comes in advance of the end of the job retention scheme on 31 October 2020 and in response to calls from trade unions, industry bodies and MPs to extend or replace that scheme.

What is the purpose of the Job Support Scheme?

The aim of the JSS is to target viable jobs.  The scheme will support the wages of those in work, giving businesses which face a reduced demand over the winter, the option of keeping employees in a job on shorter hours rather than making them redundant.  The scheme differs from the CJRS insofar as it targets roles and businesses which are only temporarily impacted by the crisis and which remain viable.

How will the JSS operate?

The government will provide a top-up to wages being paid by employers.  In order to be eligible, employees must be working at least one third of their normal working hours and being paid for that work as normal.  Of the remaining two-thirds, the government and the employer will each pay 33%, meaning that an employee would receive 77% of their normal salary.  However, the government’s contribution will be capped at a maximum of £697.92 per month.  

Which employers are entitled to use the scheme?

As with the CJRS, in order to be eligible, employers must have a UK bank account and operate a UK PAYE scheme.

The scheme is available to all small and medium sized enterprises.  Large businesses will only be eligible to participate in the scheme if they can prove that they have been adversely affected by the crisis and suffered a fall in turnover.  The government has stated that it expects large employers will not be making capital distributions (such as dividends) while using the scheme.

Which employees will the scheme apply to?

Employees who began work on or before 23 September 2020 will be eligible, provided that they are not serving notice on grounds of redundancy.  They must also be working a minimum of 33% of their usual hours and being paid for that work as normal.  

When will the scheme start and how long will it last? 

The JSS starts on 1 November 2020 and will run for six months.

What is the relationship with the job retention scheme?

Employers can claim both the JSS and a Job Retention Bonus (for more information on the JRB scheme, see our blog Covid-19: Job Retention Bonus).  The fact that an employer did not previously furlough workers under the CJRS does not prevent an employer from claiming under the JSS.

What are the areas of potential difficulty?

At this stage, there are a lot of unanswered questions about how the scheme will operate, as well as the eligibility criteria.  We expect HMRC will issue guidance on the JSS shortly and we will provide a further update.

For further information on Covid-19 and employment law, see our E&I Covid-19 hub.