As we tweeted last week, the Chancellor has announced a new Job Support Scheme (JSS), which will take over from the Coronavirus Job Retention Scheme (CJRS) when it closes at the end of October. The stated intention of the JSS is to protect viable jobs where businesses are continuing to face a lower than usual demand.
HM Treasury have now produced a factsheet setting out some further details about the ‘caps and caveats’ that will apply to this new scheme.
- The JSS will open on 1 November 2020 and will run for six months, with employers being able to claim online through gov.uk site from December.
- The JSS is not limited only to those employees that have previously used the CJRS, BUT employees must be on PAYE payroll on or before 23 September 2020.
- Aimed at SMEs – ‘large’ businesses (not yet defined) will have to meet a financial assessment test demonstrating the drop in income as a result of the pandemic.
- Employees must work at least 33% of their usual hours.
- For every hour not worked, the Government and employer pay 1/3 each.
- Government contribution is capped at £697.92 per month.
- JSS will not cover Class 1 NIC’s or pension contributions – which remain payable by the employer.
- Employees cannot be made redundant or put on notice of redundancy during the period that the grant is being claimed.
- Employees must agree the new working arrangements and changes to the employment contract must be notified in writing.
The factsheet sets out a useful example of how the new scheme will work in terms of possible government grant. It clearly demonstrates that the employer will take on much more of the cost than is currently the case under the CJRS.
|Hours Employee Worked||33%||40%||50%||60%||70%|
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||78%||80%||83%||87%||90%|
|Gov’t Grant (% of normal wages)||22%||20%||17%||13%||10%|
|Employer Cost (% normal wages)||55%||60%||67%||73%||80%|
Employers will need to have confidence that their business will recover sufficiently from next spring in order to cover the increased cost of retaining staff. For many businesses, there remains too much uncertainty about future viability to warrant this additional financial burden and redundancies are likely to remain inevitable.
Please don’t hesitate to get in touch with any of our team for practical support and guidance through any restructuring process. Here’s how we can help.