Coronavirus and Furlough: The Next Chapter

25 Sep 2020

The announcement by the Chancellor yesterday of the Job Support Scheme (JSS) heralds the next stage of the support for employers and employees facing the impact of Covid-19 on business.

With the Coronavirus Job Retention Scheme (CJRS) drawing to a close at the end of October, there had been speculation for some time as to whether there would be any extension, possibly targeted at specific industries, such as hospitality.

Despite previous denials that there would be any extension, the pressure to introduce further measures seems to have become unstoppable following the Prime Minister’s announcement on Tuesday, and the prospect of further substantial restrictions over the next 6 months.

The JSS is different to the CJRS in a number of ways.  While we are still awaiting the detailed Guidance (and no doubt Treasury Directions too) the initial information provided suggests that employers will have to jump through a number of different hoops if they want to receive support.  

Will the JSS be accessible by all employers?

The stated intention is to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce.  That can be interpreted in a number of ways.  For instance, will the employer have to show that redundancies would otherwise be considered?

For how long will the JSS operate?

The JSS will run for 6 months.

Is there a minimum amount of work that the employee must perform?

Yes. Unlike CJRS the employers must have at least some work for their employees (equivalent to 33% of normal hours).  That minimum threshold will be reviewed and may be increased after three months.

What costs will the employer have to meet?

The employee will be entitled to full normal pay for the hours worked.  The employer will then have to pay a third of the balance of the normal pay the employee is due.  The taxpayer will pick up a  further third, and the employee will forego the final third.  

What about NI and pension contributions?

The employer will have to meet these in full.

Is there any cap on the taxpayer funded contribution?

Yes, the contribution from the state will be capped at £697.92 per month.  This means that those employees on a normal salary of just over £25,000 per year will not receive the full third from the state.

Can the employer ‘top up’ any shortfall, as many employers did with CJRS?

One would have thought so, but there is a curious sentence in the information issued so far by Government which states, ‘ Our expectation is that employers cannot top up their employees’ wages above the two third contribution to hours not worked at their own expenses.  We await some clarification on this, or whether this is to be linked to some form of ‘affordability assessment’, given the reference to larger businesses (that is, not SMEs) having to meet a ‘financial assessment’.  Again, further details are awaited.

Does the employee have to agree to be placed on the JSS?

No.  As with CJRS the employer will need to achieve the employee’s agreement to the reduction in hours and pay. It appears that the individual employee will in fact be provided with information about claims made on their behalf, and that will probably be linked to an encouragement to employees to report their employer if there has been any abuse of the JSS.

We know from the experience of CJRS that there will be many practical issues that will arise from the operation of JSS in particular circumstances.  

We are therefore holding a webinar on Thursday 15 October 2020 at 10am.  Our panel will seek to bring clarity to how the JSS will operate, and its interaction with the current CJRS, as well as the CJRS Bonus of £1,000 previously announced by the Chancellor. To register for the webinar please click here.

If you have any further enquiries in relation to the Job Support Scheme please contact Partner and Head of Employment Rustom Tata. 

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