COVID-19: UK Announces New Job Support Scheme to Protect Jobs During Winter

Morgan Lewis
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Morgan LewisChancellor Rishi Sunak outlined a new sixth-month Job Support Scheme (JSS) on 24 September to replace the coronavirus Job Retention Scheme (JRS) that is due to end on 31 October 2020. The new JSS will run from 1 November 2020 to 31 April 2021 and is intended to avoid widespread redundancies and protect viable jobs in businesses that are facing lower demands over the winter period due to the coronavirus (COVID-19) pandemic. The JSS is based on a German-style system of wage subsidies where the government will contribute towards the wages of employees who are working fewer than normal hours as a result of decreased demand over winter. This LawFlash considers employees’ and employers’ eligibility for the JSS and what it practically means for employers.

EMPLOYEE ELIGIBILITY

Employees must be on an employer’s PAYE payroll on or before 23 September 2020. Under the JSS, for the first three months, employees must be working at least 33% of their normal hours following which the government will review whether to increase the threshold. For every hour worked, employers will continue to pay employees their usual wages. For every hour that is not worked by the employee, both the employer and the government will each pay one third of the employee’s usual wages and the employee will forego the final third.

This means that employees who use the JSS will receive at least 77% of their usual wages, up to the cap of £697.92. Employees will able to “cycle on and off” the JSS such that a fixed monthly working pattern is not required. However, each short-time working arrangement must cover a minimum period of at least seven days. The objective is to enable some employers to retain staff who would otherwise have been made redundant. Employers can also claim for a Job Retention Bonus, which is a one-off payment to employers of £1,000 for every employee for whom they previously claimed under the JRS, and who remains continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021. Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January. The bonus payments will be made to employers from February 2021.

EMPLOYER ELIGIBILITY

All employers with a UK bank account and part of the PAYE system and all small and medium-sized enterprises (SMEs) will be eligible for the scheme. The JSS also applies to businesses who have not previously used the furlough scheme. The government is due to publish further guidance for such businesses. Large businesses will need to meet a financial assessment test and must demonstrate that their business has been adversely impacted by COVID-19 and demonstrate that their turnover has decreased by at least a third.

CONSIDERATIONS FOR EMPLOYERS

In most circumstances, employers intending to participate in the JSS will need to seek agreement with their employees to make the temporary changes to their employment contract. Implied or express consent is likely to be valid, but consent should be documented and provided to the employee; e.g., in the form of a letter confirming the change in pay and hours. Further, while participating in the JSS, employers will be unable to give employees notice of redundancy.

Trainee solicitor Nelofar Farhang contributed to this LawFlash.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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