We have known for some time now that the Coronavirus Job Retention Scheme (AKA the furlough scheme) was likely to close at the end of October 2020. So what, if anything, is coming along to replace it?
The level of support on offer from the government under the furlough scheme has been gradually reducing since August. Rishi Sunak and the rest of the Government were probably hoping the economy would be able to stand on its own two feet by now. However, given the second wave of coronavirus infections, the local lockdowns and the general tightening of ‘social distancing’ rules, it has become increasingly clear that without further support, many businesses would fail and many jobs would be lost.
With all this in mind, the government has recently announced the creation of the new ‘Job Support Scheme’. In some respects, it is not radically different from the furlough scheme it replaces; the government provides a prescribed level of financial support to employers to help them to meet the costs of employing their staff. However the level of support differs quite considerably from that provided under the furlough scheme.
1. The employer must provide the employee with at least a third of their normal hours of work. The employer is responsible for paying the employee for these hours at their normal rate of pay.
2. In relation to those hours not worked (up to a maximum of two thirds), the employer must pay the employee one third of their normal pay, the government will pay a third (capped at £697.92 per month) and the employee has to be willing to forgo a third.
The idea is that the scheme should result in staff receiving at least 77% of their normal pay. However, this presupposes that the government funding cap doesn’t kick in. Those normally earning more than about £38,000 per year are likely to receive less than 77%.
The JSS is likely to be in place for six months from 1 November 2020 until 30 April 2021. It is not as generous or as flexible as the furlough scheme it replaces, but it is still better than nothing and will provide important support to some employers and employees.
If you are thinking about using the scheme for your staff, please get in touch with us for more information. As with the furlough scheme, it will be important to put in place clearly drafted written agreements setting out the basis on which the scheme will work and what the employee can expect to receive.
It is worth noting a few other difference between the JSS and the furlough scheme it replaces:
1. Not all employers can use the scheme. Whilst all small and medium sized enterprises will qualify, larger businesses will need to be able to show a reduction in their turnover during the COVID-19 pandemic to make a valid claim.
2. Employers cannot make a claim under the JSS if the employee in question is on notice of dismissal by reason of redundancy.
3. The JSS factsheet issued by the government suggests that employers will not be able to top up their employees’ wages to full pay, even if they want to.
We await further information on all these issues and more, as and when the government publishes fuller guidance on exactly how the JSS will operate. So watch this space.