Chancellor Rishi Sunak took to the despatch box this afternoon (Thursday 24th September) to announce the successor to the furlough scheme as part of his winter economy plan: the Job Support Scheme.
The furlough scheme, also known as the Coronavirus Jobs Retention Scheme (CJRS), was announced back in March as the coronavirus pandemic closed non-essential businesses and their ability to operate as usual. Devised to protect the economy from mass unemployment, the furlough scheme promised to pay up to 80% of an employee’s wages up to a limit of £2,500 per month in order to protect jobs.
With the furlough scheme due to come to an end on the 31st October 2020, a recent resurgence in COVID cases coupled with strict local lockdowns has led to concerns amongst employers and employees alike.
With the winter months fast approaching, ministers announced local restrictions in high-risk areas in order to protect the public in what is a season typically rife with cold and flu. But the government must also mitigate the long-term impact on the UK economy and support businesses in bringing their people back to work. As such, the Job Support Scheme was announced this afternoon.
What is the Job Support Scheme?
Announced as part of a package of targeted measures to protect jobs and safeguard against a rise in unemployment; the Job Support Scheme is aimed at businesses that are facing a dip in demand due to the pandemic.
Much like the furlough scheme from earlier this year, the goal of the Job Support Scheme is to keep people in employment and prevent mass redundancies.
The JSS will come into force on the 1st November 2020, the day after the furlough scheme comes to an end, and is expected to run for 6 months.
Employees will need to work a minimum of 33% of their usual contracted working hours for which they will receive full pay, as normal. For hours not worked, the government and employer will each pay one third of their equivalent salary (capped at £697.92 per month).
Let’s look at an example of how the Job Support Scheme would work in practice.
Jane is contracted to work 35 hours per week. Her employer has requested that from November 1st, she works for half (17.5) of those hours. Jane’s hourly rate is £11 per hour. For those 17.5 hours, she is working, her employer will pay her in full, as normal: 17.5 hours x £11 = £192.50 per week = £770 per month.
Under the new scheme, the government and Jane’s employer will pay one third of the hours not worked.
Therefore, her employer and the government will each pay Jane for a further 5.8 hours (one third of 17.5 hours not worked).
5.8 hours x £11 per hour = £63.80 per week = £255.20 per month.
As a result, Jane’s weekly earnings would be: £320.10 (£1,280.40 per month).
This is broken down as follows: £192.50 (for 17.5 hours worked) plus a further £63.80 (one third of hours not worked) from her employer plus £63.80 (one-third of hours not worked) by the government under the Job Support Scheme.
Who is eligible for the Job Support Scheme?
The scheme is open to all businesses, regardless of whether they have used the furlough scheme or not. All employers are eligible for the scheme and only those employees that are not on a redundancy notice can be included in the Job Support Scheme. Businesses must have a UK bank account and PAYE scheme.
However, large businesses are expected to demonstrate that their business has been adversely affected by COVID-19.
Further guidance will be published by the government in due course around eligibility.
What does it mean for HR?
For those businesses that look to take advantage of the Job Support Scheme later this year, HR will have to work directly with line managers and business leaders to decide which roles could operate on reduced hours along with the hours required of each employee in order to maintain operations. Temporary contracts may have to be drawn up in order to agree these new adjustments with employees in advance.
In these turbulent times, it is crucial that HR and payroll teams are accurately tracking the hours worked by their employees and using this information to accurately calculate pay for each individual.
Undoubtedly, this could be a very difficult time for those employees are having their hours reduced as personal finances become stretched.
Indeed, employers will have to strike a delicate balance between maintaining productivity to keep the business afloat while reducing hours worked.
It is critical that HR teams lay the groundwork now should their business seek to take advantage of the Job Support Scheme and begin planning for November 1st in terms of headcount and hours required.