A bridge over troubled water?
Background
After weeks of speculation and uncertainty, the government has announced its plans for supporting jobs over the winter months, following the end of the furlough scheme on 31 October. The new Job Support Scheme (JSS), which will take over from the furlough scheme, and run for six months from 1 November, is part of the government’s Winter Economy Plan to buttress the economy as it is suffers from a resurgence in COVID-19.
More limited in its support than the furlough scheme, the JSS is designed to provide businesses heavily affected by a fall in demand with an alternative to making their employees redundant. Instead, by offering support to firms that are in a position to offer some work to their employees, but only on reduced hours, the government hopes to preserve such ‘viable’ jobs and allow businesses to bridge the gap until demand picks up.
How will the JSS work?
Under the scheme, the employer will pay its employees for any hours they do work as normal, as well as a third of their normal hourly rate for any unworked hours, with the government subsidising another third of the unworked hours up to a cap of £697.92 per month, provided the employees work at least 33% of their usual hours. In other words, employees will be paid by their employers for any hours worked but will also receive two thirds of their pay for any hours not worked, the burden of which will be shared equally by the employer and the government. Therefore, an employee working half their usual hours would receive about 83% of their normal wage, with their employer paying 66.67% (two-thirds) and the government contributing 16.67% (one-sixth).
Any small or medium sized business will be eligible to claim under the scheme, while large employers will have to show that their turnover is lower than it was before they were impacted by COVID-19. There is no requirement to have previously claimed under the furlough scheme, although employers that have done so can benefit from the JSS and the Job Retention Bonus.
What does it mean for businesses?
There are concerns that many businesses, particularly those operating in industries that remain closed due to government restrictions, which cannot support their employees working at least 33% of their normal hours, will not benefit from the scheme. It has also been pointed out that it may be cheaper for employers to employ one worker on full hours, rather than two on reduced hours.
Nevertheless, for those businesses that are eligible, claiming under the scheme may be an important lifeline as they continue on their road to recovery. In particular, the scheme may enable them to keep hold of their skilled employees over what will undoubtedly be a challenging Winter. This would prevent these businesses from having to train new workers when demand picks up again in the Spring.
We will be providing full details of the scheme as soon as further details are published by the government.
