In anticipation of further restrictions, the chancellor has announced an expansion of the Job Support Scheme (JSS) which replaces the Coronavirus Job Retention Scheme (CJRS) when it ends on 31 October 2020. The further restrictions are expected to hit the hospitality sector hard but will the expansion of the JSS provide the lifeline that workers and unions are calling for?
How is the job support scheme expanding?
The JSS (see weekly LELR 691) which comes into effect for six months on 1 November 2020 is intended to provide financial support to employers where staff work fewer hours as a result of lower demand. Under the scheme, employers pay workers for the hours that they work (which must be a minimum of a third of their normal hours), and for the hours that they do not work the government and employer will each pay a third of their pay. The amount the government will pay is capped at £697.92 per month.
The newly announced expansion to the JSS will apply only to those businesses that are legally required to close as part of local or national restrictions. They will be able to claim a grant to pay the wages of workers who cannot work at all as a result.
How much is it?
The government will pay two thirds of each worker’s salary up to a maximum of £2,100 a month. This means that the government will pay 67 per cent of the worker’s wages. The employer will not be required to pay any of the worker’s wages but will still have to meet their National Insurance Contributions (NICs) and pension contributions. The government estimates that “around half of potential claims [by employers] are likely not to incur employer NICs or auto-enrolment pension contributions.” This indicates that the government expects employers to predominantly seek to use the grant in relation to low earners since an employer is only required to pay Class 1 NICs where workers earn above the secondary threshold which is £169 per week for the tax year 2020/21.
What is provided under the expansion of the JSS is still not as favourable as the CJRS whereby workers receive 80 per cent of their total wages when on furlough. Not surprisingly, unions and others consider this a second rate scheme and are calling for it to be improved to at least the level of the CJRS so that workers who cannot work because the employer has been legally forced to close can receive at least 80 per cent of their pay.
When will it apply and to whom?
The same as the JSS, the expansion comes into effect from 1 November 2020 for six months and follows similar rules. However, the enhanced grant can only be claimed by those businesses that are legally required to close their premises, including those that are restricted to delivery or collection only services from their premises.
The expanded JSS is limited in scope. In particular, it does not apply to employers who are required to close by local public health bodies as a result of specific workplace outbreaks – although it is not clear why they are exempt. Nor will it apply to employers who cannot afford to open because of the effect of the tighter restrictions. While there is no need for a worker to have previously been furloughed under the CJRS, an employer cannot claim a grant to pay the worker’s wages unless the worker has ceased work for a minimum of seven consecutive days.
Conclusion
There is a growing concern that even the expanded JSS will not be enough to save jobs. The bottom line is what is on offer is simply not as generous as the CJRS.
In circumstances where government policy appears to favour local lockdowns, particularly in the Midlands and North of England, it is clear that what is needed to save jobs and protect businesses is a continuation of the CJRS or, at the very least, targeted sector-specific schemes that provide support to the equivalent of the CJRS to protect the most vulnerable workers.
The government proposals compare much less favourably with the rest of Europe. In France, for example, the scheme which provides for companies to be reimbursed 85 per cent of a person’s salary is to be extended into the New Year. In Germany, the scheme, which pays 67 per cent of salary for the first three months and 87 per cent after six months, is set to run until the end of 2021.
To learn more about the expansion of the job support scheme click here.
Articles shared by Thompsons relating to coronavirus (COVID-19) are correct on the time of publication. You should check the government's guidelines for the latest information and advice at https://www.gov.uk/coronavirus.