Furlough replacement – The Job Support Scheme

The Chancellor has announced a new Job Support Scheme (JSS), which is to run from November 1st 2020 for 6 months and will replace the current Coronavirus Job Retention Scheme which ends on 31 October 2020.

Whilst businesses continue to deal with the impact of reduced income and challenging trading conditions due to COVID-19, there was some hope that an improvement was on the way over the coming winter months.  However, with widespread warnings that fresh curbs on business activity and further lockdown measures could last another six months, the Government has introduced the JSS to support the wages of those in viable jobs. The JSS aims to keep employees in jobs, but with shorter hours, rather than making them redundant.

Further detail on the JSS is expected once guidance has been released by the Government, but after the Chancellor’s statement on the 24th September, we now know that the following applies to the JSS:

  • The JSS will be introduced on 1 November 2020 to protect only viable jobs
  • Employees must work at least a 1/3 of their normal hours and be paid for those hours as normal by their employer
  • The Government and employers will increase those wages by covering 2/3 of the pay that employees have lost by the reduction in their working hours, and employees will keep their job
  • For every hour not worked, the employer and government will each pay 1/3 of the employee’s usual pay, subject to certain conditions
  • The table below outlines how the JSS is likely to work:-

Hours Employee Worked

33% 40% 50% 60% 70%
Hours Employee Not Working 67% 60% 50% 40% 30%
Employee Earnings (% of normal) 78% 80% 83% 87% 90%
Gov’t Grant (% of normal wages) 22% 20% 17% 13% 10%
Employer Cost (% normal wages) 55% 60% 67% 73% 80%
  • The level of grant under the JSS will be calculated using an employee’s usual salary, but the government contribution will be capped at £697.92 per month
  • Employees must not have been made redundant, nor given notice of redundancy during the period within which their employer is claiming the JSS grant
  • Employer’s will be reimbursed in arrears for the government contribution
  • Anyone who has been employed since 23 September 2020 is eligible
  • All small and medium businesses will be eligible to apply for the JSS, as long as they have a UK bank account and a UK PAYE scheme
  • Larger businesses can only apply to the JSS where their turnover or revenue has fallen or been adversely affected by COVID-19. there will be restrictions on the capital distributions (such as dividends) of large companies to their shareholders, whilst they are in receipt of JSS
  • The JSS will be open to employers who did not originally claim any furlough payments under the Coronavirus Job Retention Scheme and run for 6 months starting in November 2020
  • Employers retaining furloughed staff on shorter hours can claim under the JSS and the Job Retention Bonus (a £1,000 one-off payment for furloughed employees who remain continuously employed through to 31 January 2021, subject to eligibility criteria).

If you have concerns or HR related matters you would like support or advice on please contact the MAD-HR team today.