The Chancellor has today (22 October 2020) amended his original plans for the scheme that is to replace the Coronavirus Job Retention Scheme (“CJRS”) after it ends on 31 October 2020. The new scheme, which is now to be known as the “Job Support Scheme Open”, had been subjected to criticism when its details were first released on the basis that it did not go far enough to assist employers.
The key points of the new Job Support Scheme - Open are that:
1. It will apply to those businesses that are facing lower demand over the winter due to Covid-19.
Employees working a minimum of 20% of their normal working hours will receive at least 73% of their normal pay.
This is on the basis that 20% of their normal working hours will be paid for by their employer as normal.
Of the remaining amount, the Government will cover the employee’s wages for up to 61.67% for hours not worked. The employer will also pay 5% of the hours not worked by their employee. The Government contribution will be capped at £1,541.75 per month.
As an example, if someone on £2,000 a month works 20% of their hours, they’d get £400 normal pay plus £80 extra from their employer and £986.72 from the government. The employee would sacrifice £533.28.
2. Larger businesses (those with more than 250 employees) will only be entitled to use the scheme if they can prove that their revenue has been adversely affected by Covid-19, such that it has remained level or lower than before the business began experiencing difficulties due to Covid-19.
3. Even if employers have not accessed the CJRS, they will be entitled to use the new Job Support Scheme Open.
4. Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming support under the Job Support Scheme Open.
The Job Support Scheme Open will come into effect on 1 November 2020 and last for a minimum of 6 months. Employers will also still be able to claim a bonus under the previously announced Jobs Retention Bonus scheme.
For employers to benefit from the Scheme, the employees they are making a claim for must have been on their PAYE payroll on or before 23 September 2020. Their employees must also agree to the new short-time working arrangements.
Payments will be made to employers in arrears. As such, businesses will be required to pay the Government’s contribution before being reimbursed. As with the CJRS, employers will be able to claim these payments back by making a claim online from 8 December 2020. Notably, the payments will not cover employer NI contributions or employer pension contributions. Employers will also be able to top up employees’ wages above the 5% contribution at their own discretion.
The existing self-employment scheme will also be extended so that 40% of profits will be covered by Government grants, up to a maximum of £3,750.
The extension to the Job Support Scheme for businesses legally required to close will remain the same (see the link to our article on this scheme here). Given the naming of the new Job Support Scheme Open, the Government are now calling this other scheme the Job Support Scheme Closed. (Simple, right?)
There are still questions that remain and as ever, the devil will be in the detail.
The Employment Team at Leathes Prior have produced a bespoke Guidance Note on the Job Support Scheme, which includes assistance with how to calculate what the cost to the employer would be of utilising the scheme. We also have a template letter that an employer will need to issue in order to take advantage of the JSS. If you would like to receive copies of our Guidance Note and/or template letter or require advice about the JSS Open, please contact our Employment Team via email or call us on 01603 610911.