The Chancellor’s Job Support Scheme to protect viable jobs

What can employers and employees expect from 1 November 2020?

Government image of Union Jack advertising Job support scheme

Rishi Sunak has now announced a new Job Support Scheme to support viable jobs.  It will be in place for six months from 1 November, immediately tailing on from the Coronavirus Job Retention Scheme (CJRS or furlough scheme).  The stated aim is to support ‘viable UK employers who face lower demand due to Covid, and to keep their employees attached to the workforce’, by giving employers the option to keep people in jobs where feasible.

Note here that the scheme only applies to ‘viable jobs’.  The intent is to support employers to keep things going over the Winter and head off as many redundancies as possible.  Indeed, employers will not be able to use this scheme to pay employees on redundancy notice.

We await the small print (which the employment law community are once again expecting late on Friday evening!), however, the headlines include the following:

  • Employees must be working at least a third of their normal hours and be paid for that work as normal by their employer.
  • For every hour not worked (meaning the remaining, up to two-thirds of normal hours) the employer and the government will each pay one third of the employee’s usual pay.
  • The government’s contribution is capped at £697.92 per month.
  • Employees will receive at least 77% of their pay (assuming the government cap hasn’t been reached).
  • Employers will be reimbursed in arrears for the government contribution, meaning employers will have to pay the money out before recouping the payments – perhaps HMRC has learned from the huge uptake of the CJRS.
  • Employees must not be on a redundancy notice – so in contrast to the CJRS, this scheme cannot be used to pay notice – this is in line with the aim to support only viable jobs.
  • Employees who were employed on 23 September 2020 are eligible.
  • All SME’s are eligible, even if they didn’t use the CJRS, but large businesses (whatever “large” means in this context) must show their business has been adversely affected by Covid.
  • Employers who bring back furloughed employees on reduced hours can claim the Job Support Scheme as well as the Job Retention Bonus previously announced.

The question remains whether this scheme will just shunt the spectre of mass redundancies further off into the future.  The hope is that it will serve to keep more people in a job and being paid something (even if not in full), and thus head off some of the broader consequences of unemployment, such as food poverty, housing crisis, and increased social security costs.  We will only find out the answer to this next Spring.

The new scheme provides the flexibility to keep employees working part time if demand has fallen – the line from government and advisory bodies throughout has very much been to encourage employers to look at all options short of redundancies, including part time working.

However, the requirement to work at least one-third of normal hours means the scheme wouldn’t help those whose workplace is totally shut down again in the event of another lockdown.  That might make things tricky to balance, and with no ability to furlough staff and recover some of the costs this time, employers whose businesses are shut down, who can’t say their employees are in ‘viable jobs,’ may have no other option than to make redundancies.  This is the gap in coverage where the government is facing calls for sector specific help like a continuation of the CJRS.

Full details of the Chancellor’s Winter Economy Plan can be found here. For more information about Covid-related employment concerns, contact our specialist team who will be happy to help.

Please note the contents contained in this article are for general guidance only and reflection the position at time of posting. Legal advice should be sought before taking action in relation to specific matters.

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