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The Government have announced additional financial support for Companies to try and avoid a wave of redundancies and job losses when the Coronavirus Job Retention Scheme (or furlough scheme) ends on 31 October 2020.
This new scheme will be known as the Job Support Scheme (JSS) and come into effect from the 1st of November 2020 and continue for six months until 30 April 2021.
Final details have yet to be published but from the information we have to date:
- All small and medium enterprises (SME) will be eligible to access the scheme. Larger organisations will be required to demonstrate they have been adversely impacted by COVID-19 (e.g. loss of turnover).
- For an employee to qualify for the JSS, they must be on an employer’s PAYE payroll on or before 23 September.
- Neither the employer nor employee needs to have previously used the furlough scheme in order to apply for the JSS.
- Employees will need to work at least 33 per cent of their usual hours in order to access the JSS. This minimum may be increased from February 2021.
- Payments to employees will be at least 77 per cent of their normal wages, subject to the cap on government contributions and will be paid monthly in arrears as follows:
For hours worked: Employers will be responsible for paying the employee their normal contracted wage for any hours they actually work (a minimum of 33 per cent).
For hours not worked: the employee will be paid two-thirds of their usual hourly wage, made up as follows:
By the government paying one-third of hours, up to a cap of £697.92 per month meaning maximum government contribution will be 22 per cent, this will reduce on a sliding scale the more hours an employee actually works.
Employers paying one-third, 22 per cent, of hours not worked.
- Employers will be responsible for paying employer National Insurance Contributions and pension contributions.
- Each short-time working arrangement must cover a minimum pay period of 7 days. Employees will be able to work different patterns in different pay periods, and can “cycle on and off” the JSS.
- Employers must agree the new short-time working arrangements with employees and confirm them in writing.
- Employees who have previously been furloughed will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
- Employers using the JSS will also be able to claim the Job Retention Bonus if they qualify for it.
- It is expected that employers will not be permitted to top up their employees’ wages above the two-thirds to cover any hours not worked at their own expense.
The above is a summary of the scheme at the moment, whilst it may seem to be a lifeline for the continuity of your company going forward, you need to look at our points of caution below and do some serious number crunching to calculate if it will work for you.
- In contrast to the furlough scheme, employees cannot be made redundant or put on notice of redundancy during the period for which the employer is claiming the JSS grant for that employee. It is not yet clear whether this will refer to the whole six months of the JSS or a particular pay period, or what will happen to previous payments if someone is made redundant – something which will hopefully be covered by further guidance.
- The JSS is less generous for employers than the furlough scheme, with employers needing to contribute at least 55 per cent of normal wages, compared to 10 per cent (in September), and 20 per cent in October. Given that employers will only be getting 33 per cent of work in return for this payment, this may not feel an attractive option. It is being suggested that it may possibly be more cost effective for employers to make redundancies rather than bring high numbers of employees back from furlough, or to bring a few employees back full time, rather than many part-time under the JSS. So if finances are tight you will need consider your options carefully before making any final decision.
If having considered the above you feel the JSS is not a workable option you may now be in the position where you are unfortunately looking to make some of your staff redundant. With the end of the CJRS imminent (just over 4 weeks away as we write this article) this is something you need to put into action sooner rather than later. Any redundancies you may be planning to make must follow the normal set Redundancy Procedures, pandemic or no pandemic, and these take time.
We have published a news article around the impact of covid-19 and making redundancies https://turnstonehr.com/impact-of-covid-19-redundancies/ and we advise you read this for further guidance
Please do get in touch for any help with the JSS scheme or if you need any assistance with planning for redundancies. Our contact details are below.
Phone: (01229) 480676
Mobile (07715) 822216
Phone: (01229) 821270
Mobile (07725) 735581
DISCLAIMER: The materials in this guidance are provided for general information purposes and do not constitute legal or other professional advice. While the information is considered to be true and correct at the date of publication, changes in circumstances may impact the accuracy and validity of the information. Turnstone HR cannot be responsible for any errors or omissions, or for any action or decision taken as a result of using the guidance. You should consult with us first for advice where appropriate
Published 30th September 2020