"Job Support Scheme" - The Winter Economy Plan

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24 September, 2020

Rishi Sunak has today unveiled the Government's plan to protect jobs and support businesses over the coming months following the announcement earlier this week, which warned Britons that restrictions could be in place for the next 6 months.

The Chancellor confirmed that the current Coronavirus Job Retention Scheme (known as the furlough scheme) will come to an end on 31 October as planned and will not be extended as, in his words, "it is fundamentally wrong to hold jobs that only exist under furlough".

However, it will come as much relief to both employers and employees alike that going forwards businesses may be able to access financial support under the Government's new "Job Support Scheme", of which the Chancellor's key motive is to "support people in viable jobs with genuine security" who are working at least a third of their normal hours.

Details of the Scheme:

The Job Support Scheme will be in place provisionally for 6 months and is due to start on 1 November 2020.

Employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the government and the employer will each pay one third of their equivalent salary. This ensures that employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they can't work.

In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee's usual salary, capped at £697.92 per month.

The Scheme will be targeted towards businesses that need it the most in sectors that have been most hit by the pandemic. All small to medium businesses will automatically be eligible for the scheme. Larger firms will be required to prove that their profits have been affected by COVID-19 to be able to utilise the scheme. Larger businesses will also not be allowed to pay dividends to shareholders whilst using the new scheme.

The Scheme is available to all businesses regardless of whether or not they have previously used the furlough scheme.

Employers can continue to claim the Job Retention Bonus alongside the Job Support Scheme.

For further information on the scheme as it as currently been announced please see: https://www.gov.uk/government/news/chancellor-outlines-winter-economy-plan

Key considerations:

  1. Under the new guidance, businesses will not be able to issue redundancy notices to employees whilst taking part in this scheme. This restriction raises multiple questions which are currently unanswered such as, what will be the definition of a redundancy? Will employees with under 2 years' service be protected? If a business opts to use the scheme and then finds themselves in a position where they can no longer afford to pay 1/3 of the employees hours, does the protection from redundancy fall away? We expect that further guidance will be provided in the days to come.
  2. Can employees be moved from furlough automatically to the job support scheme or will there need to be further written agreement? The Government have not currently announced any guidance in this respect.

Other measures:

Other measures and support announced today by the Chancellor include:

  • "Pay as you grow scheme" allows companies further time and flexibility to repay bounce back loans over a period of up to 10 years.
  • The self-employed grant will be extended on similar terms as the Job Support Scheme
  • The deadline for taking out the coronavirus business interruption loan will be extended until 30 November, with the government guarantee extended for up to 10 years.
  • VAT will remain at 5% for the worst affected sectors, hospitality and tourism until 31 March 2021.

At Forbes Solicitors our Employment Team have been working tirelessly with our clients during the pandemic to support and advise them on implementing the Coronavirus Job Retention Scheme, providing legal and practical guidance through restructures and redundancies as well as handling numerous HR queries arising as a result of the pandemic on areas such as sick pay, home working, child care.

We continue to be here to work with you and whilst today's announcement lacks the detail you need to implement changes immediately rest assured that we will bring to you the detail from the guidance as soon as we see it and have digested it. We have plans to hold a briefing session to be brought to you by Emma Swan, Partner and Head of Commercial Employment, followed by our Q&A session with Jonathan Holden, Partner and National Head of Employment as soon as possible.

For more information contact Emma Swan in our Employment & HR department via email or phone on 0333 207 1154. Alternatively send any question through to Forbes Solicitors via our online Contact Form.

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