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Practicalities of the Job Support Scheme

On Thursday 24th September 2020, the Chancellor, Rishi Sunak, announced a new scheme to support employees and employers when the current Coronavirus Job Retention Scheme comes to an end on 31st October 2020.  The new scheme is known as the Job Support Scheme (JSS). 

There was then a further announcement regarding an extension to the scheme on Friday 9th October 2020.  The extension gives further financial support to businesses who are required to shut due to local Covid restrictions.

The purpose of this post is to give you some additional information on what the Job Support Scheme is and how you use it.

We strongly advise you get in-touch with us on 0203 319 1649 to get expert, tailored guidance before you take any actions.

What is the Job Support Scheme?

The Chancellor has been clear that the purpose of the Job Support Scheme is to save “real jobs”.  The position is that the government can no longer protect jobs that would not exist if it were not for the CJRS.  There’s an acceptance that not every job can be saved.

Under the new scheme, an employee needs to work at least 33% of their contracted hours.  The employer is responsible for paying them for those hours worked, plus 33% of their unworked hours.  The scheme will also cover 33% of the unworked hours, and the employee will be unpaid for the remaining 33% of their unworked hours. 

Here is a worked example:

  • An employee is contracted for 40 hours per week and is paid circa £577 per week (£14.43 per hour / circa. £30k pa).
  • The employee now works 13 hours per week; this leaves 27 hours unworked.
  • For the 13 hours worked, the company pays the employee £188 (13 x £14.43).
  • Of the 27 hours not worked, the company must pay for 33% of these (9 hours) and the government will pay 33% as well.
  • So, the unworked hours cost the company £130 (9 hours x £14.43), and the government contributes the same.
  • The employee therefore receives pay for 31 hours, which is £448 (£188 + £130 + £130), equivalent to 80% of their normal weekly pay.

In this example, it is important to note that the company is paying the employee for 9 hours per week that the employee is not working.

What is the extension to the Job Support Scheme announced on 9 October?

In addition to the basic scheme sent out above, on Friday 9th October, the Chancellor announced an extension to the scheme.  The extension is designed to support those businesses who are legally required to close due to national or local Coronavirus restrictions. 

In a situation where a business is legally required to close, the government will pay up to two thirds of employees’ salaries up to a maximum of £2,100 a month. The employer is only required to pay the National Insurance and pension contributions.

This extension only applies to sectors that are required to close under Coronavirus restrictions (think nightclubs, restaurants and bars if local restrictions apply).  It does not cover businesses who develop an outbreak on premises and are instructed to close temporarily by the local health authority.

Who is eligible for the JSS?

For a business to be able to make a claim under the JSS you must have eligible employees, a UK bank account and a UK PAYE scheme.  Eligible employees are those that were on your payroll as at 23rd September 2020 (they need to have actually appeared on a payroll submission before this date so if you pay monthly, most likely individuals will have joined your company at some point in August and have appeared on your August payroll submissions).

In addition to the above, if you are a large company then you must be able to pass a financial impact test which demonstrates that your business has suffered financial detriment due to Coronavirus; as an SME this does not apply.  It is yet to be officially confirmed what the definition of an SME will be under the scheme, but it is assumed that it will be aligned to the definition in the Companies Act 2006 which states that an SME has to meet two of following criteria:

  • Have an annual turnover of £36million or below;
  • Have a balance sheet total of £18million or below;
  • Have 250 or fewer employee.

You don’t have to have made a claim under the CJRS in order to be able to use the JSS.  In addition, the employees that you put on the JSS don’t have to be employees for whom you have made a claim under the CJRS.

Can I just place an employee on the Job Support Scheme?

No.  In order to place an employee on the JSS you are placing them on short-time working and you need their consent in order to do this.  It may be slightly easier for you if you have a short-time working clause in your contract but regardless, you should still go through a consultation process.

You also need to ensure that the way in which you select the people to place on the JSS is fair otherwise you could find yourself dealing with many discrimination claims. 

Our recommendation is that you approach this in a similar way to how you would approach a redundancy situation.

You should:

  • Review your business and determine which roles need to be placed onto the JSS.
  • Begin consultation. In an ideal world, you would sit all impacted individuals down and ask for volunteers in the first instance.  You may well have individuals who would be more than happy to be placed on the JSS and if you can achieve your cost savings this way then it will be the easiest approach.
  • If you can’t get the volunteers or if this approach simply wouldn’t work for your business due to your structure and individual skill sets, then you should explain to the selected individuals how they have been selected and we’d recommend giving them the opportunity to challenge that selection.
  • Having completed the consultation process, the hope is that you will have the consent of the individuals to place them on the JSS.
  • You need to then write to them to confirm the changes to their contract of employment and this written agreement will need to be available to HMRC on request.

What if someone refuses to go on the Job Support Scheme?

It’s for this reason that we’re recommending a consultation process as, if someone refuses to go on the JSS, it’s likely that the alternative for them will be redundancy and, if an individual has more than 2 years’ service, you will need to ensure that the redundancy process is entirely fair so as to avoid unfair dismissal claims.

If you find yourself in a situation where you can’t reach an agreement with an employee, seek help.  You’ll need to run a redundancy process, but it will be very important that this redundancy process includes all individuals who would be placed in the pool in a normal redundancy situation.  You cannot target just the person who has refused to go on the JSS.

In the current market, if you manage the communication correctly, it’s unlikely that people will refuse to be placed on the scheme, but we cannot stress enough the importance of approaching this situation with caution.  There is no case law as yet to determine how the treatment of all of these issues will be ruled in an Employment Tribunal so demonstrating that you were fair in your treatment of employees, employed best endeavours to follow an acceptable approach to managing the situation and keeping documentation that supports all that you do will be incredibly important.

What if I want to reduce employee’s hours but not use the JSS?

Under the JSS, as well as paying employees for the hours that they work, you also have to pay them for 1/3 of the hours that they don’t work.  This may not be financially viable for your business.  You may have a requirement for an employee to work 13 hours a week but not be able to afford to pay them for 1/3 of their unworked hours. 

There is nothing to stop you entering into a consultation with employees in order to reduce their hours.  This is likely to be a difficult conversation as employees will know of the JSS, will know that they will be better off under the scheme and will want to know why you are not making use of it.  Whilst it may be difficult, you are within your rights to not use the scheme if it is not financially viable for you to do so.

Again, if this is something you are considering, we really do advise you to seek professional help.

What happens with employee’s holiday if they go on JSS?

At the moment, we don’t know the answer to this question.  It’s clear that employees would accrue holiday for the hours that they work i.e. if an employee is working 40% of the time then they will accrue 40% of their holiday entitlement.  However, whether employees also accrue holiday for the unworked hours has yet to be commented on.  Our assumption would be that they will not but, given that employees did continue to accrue holiday whilst furloughed, it’s possible that a different approach will be taken.  We’ll update you when we know more.

Can I make people redundant whilst they are on the JSS?

Yes and no! 

Yes, in that you can carry out a redundancy consultation process with employees who are on the JSS.  No, in that you cannot have people working notice whilst on the JSS.  So, you could conduct and complete the redundancy consultation process whilst an employee is on the JSS but the date on which it concludes and on which you serve notice will be the date on which the employee needs to be removed from the JSS and you will be required to cover the full cost of their notice pay.

You can find out more about how we can help you manage redundancies on our Redundancy Support page.

We have also written a guide to redundancies which you can find here:

How To Make Someone Redundant - Lighter HR

If you’d like help with the Job Support Scheme or other Coronavirus matters, contact us on 0203 319 1649 or fill in the form below.

Contact Us
Employee Issues? | Our Expert HR Consultants Can Help You | Lighter HR

If you’d like help with the Job Support Scheme or other Coronavirus matters, contact us on 0203 319 1649 or fill in the form below.

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