COVID-19 Update: Job Support Scheme Introduced

Posted on September 28, 2020

With the Coronavirus Job Retention Scheme due to end on 31 October, there has been a great deal of speculation on what – if anything – will replace this financial support, which has provided a lifeline for many businesses over the past 6 months. In fact, just over a month before the scheme is set to end, there are still more than 2 million workers on furlough.

As a result, business owners were intently listening to the Chancellor of the Exchequer’s Winter Economy Plan, which was announced last week. In his speech, Rishi Sunak stated that his “number one economic priority is to protect people’s jobs”, by unveiling the extension and introduction of financial measures to help the self-employed and SMEs survive through the winter and into 2021. Mr Sunak confirmed that the Coronavirus Job Retention Scheme will not be extended. Instead, the new Job Support Scheme was one of the major announcements on the day; details of which we share below.

What is the Job Support Scheme?

The most highly anticipated measure of the Winter Economy Plan is the new Job Support Scheme, which comes into force on 1 November 2020, to effectively replace the support that the furlough scheme provided. In the scheme, employers will be part-funded for employees’ wages, as long as these employees work at least 1/3 of their usual hours.

How does the Job Support Scheme work?

Employees will need to work at least 1/3 of their usual hours, which will be paid by their employer as normal. The Government and the employer will then contribute 1/3 of outstanding wages each. This means that affected employees will be paid up to 77% of their normal wages despite working just 33% of their normal hours. It’s also important to note that employees on this scheme don’t need to have previously been on the furlough scheme to be eligible.

Which businesses will be eligible for the Job Support Scheme?

The Chancellor stated that only small and medium businesses are eligible for the scheme to avoid abuse of the support available, unlike the Coronavirus Job Retention Scheme, where all were eligible to apply. According to Mr Sunak, larger businesses will only be eligible “when their turnover has fallen”. More detail on eligibility is due to follow soon.

How long will the Job Support Scheme last?

The Job Support Scheme will be in force for 6 months from November 2020, in order to try and protect “viable jobs” in small and medium businesses who are facing lower demand over the winter months due to Coronavirus.

How can employers claim through the scheme?

Similar to the Coronavirus Job Retention Scheme, employers will be able to make a claim online for the Job Support Scheme through the from December 2020.

If employers take advantage of the Job Support Scheme, can they still claim for the Job Retention Bonus?

The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the Coronavirus Job Retention Scheme, and who remains continuously employed through to 31 January 2021. Employers using the Job Support Scheme will still be able to claim the Job Retention Bonus if they are deemed eligible. To be considered eligible, employees must have earned at least £520 a month on average between 1 November 2020 and 31 January 2021, which equates to a total of at least £1,560.

What else was included in the Winter Economy Plan?

The Winter Economy Plan also included updates for self-employed individuals and extensions to the VAT rate cut for hospitality and tourism, as well as extensions on loan applications. Learn more about the Winter Economy Plan here.

How we can help

Here at Jefferies, we appreciate this is a challenging time for businesses of all sizes. If you have issues relating to any aspect of Employment Law during this time, then please don’t hesitate to get in touch with our team. You can follow our updates at www.jefferieslaw.co.uk/coronavirus and get in touch with our specialist Employment Law team on 01702 332 311.

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