New Job Support Scheme announced

Chancellor Rishi Sunak announces new Job Support Scheme as successor to the outgoing Coronavirus Job Retention Scheme.

24 September 2020

While the full details are not yet available, the key points announced by Chancellor Rishi Sunak are:

The Coronavirus Job Retention Scheme (CJRS)/furlough will end as planned at the end of October. For many employers, this may unfortunately mean that redundancies are necessary.  

A new Job Support Scheme (JSS) has been introduced: the aim is stated to be to keep viable jobs. Three key principles were announced:

1. Viable jobs are being supported. This means that the employee needs to work at least 1/3 (33%) of normal hours which will be paid by the employer. For the remaining hours not worked, the employer pays 1/3 (so min 55% total) and the government pays 1/3 (so 22% total) and the employee waives the remainder (23%). We note this formula means the fewer hours an employee is working compared to usual, the higher the proportion of salary the employer (and government) is required to pay for hours not worked.

These figures are based on an employee working the minimum of 33% of normal hours who would receive 77% of normal pay (55% paid by the employer and 22% covered by the government grant). The employer will have to fund the full payment to the employee (77% in this example) initially with the government JSS grant claimed retrospectively. The government contribution will be capped at £697.92 a month. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.

2. The JSS targets specific firms – all SMEs plus larger employers who have suffered a reduction in turnover.  There is an expectation that the employers claiming under the JSS will not make dividend payments. It is not sector-specific as had been speculated. Unfortunately, we do not yet have details on how reduction in turnover will be defined, and of course this will often be key to whether employers qualify. 

3. The JSS is open to employers across the UK, even if they have not previously used furlough. It will be available for six months starting from November. The JSS can be claimed in addition to the Job Retention Bonus where an employer qualifies (including keeping previously furloughed staff employed until the end of January 2021). Employees must be on an employer’s PAYE payroll on or before 23 September 2020 to qualify for the JSS. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.

There is to be a similar scheme for the self-employed.

The government has also released a JSS Fact Sheet explaining more detail and including a helpful table showing varying contribution levels depending on the percentage of time worked.

If you have any questions on the above, or the current CJRS/furlough scheme and Job Retention Bonus, please get in touch with your usual Shepherd and Wedderburn contact.