Insights
When originally announced, the JSS required employees to work a minimum of 33% of their normal hours. This has now been reduced to 20%, meaning that employees working as little as one day a week are now eligible for the scheme. In respect of pay, instead of a minimum requirement of paying 55% of wages for a third of hours, as announced last month, employers will have to pay for a minimum of 20% of usual hours worked, and 5% of hours not worked.
The government will now fund 61.67% of the wages for hours not worked. This more than doubles the maximum payment to £1,541.75. In the most generous case, the state will now go from funding 22% of wages to just under half.
Example:
Andrew normally works 5 days a week and earns £1,400 a month, working in a restaurant in the hospitality sector. His company is suffering reduced sales due to coronavirus. Rather than making Andrew redundant, the company puts Andrew on the Job Support Scheme, working 20% of his usual hours.
- His employer pays Andrew £280 a month for these hours.
- For the time he is not working (80%), he will get 66.67% of his pay for that time. His total wage package is 73%, equal to £1,027.
- The Government will give a grant worth £691 (61.67% of hours not worked) to Andrew’s employer to support them in keeping Andrew’s job, and his employer will pay a further £56 for hours not worked (5% of wages).
- In addition, the employer will cover the Employer NICs and auto enrolment pension contribution on the payment (£56)
Although the aim of the change was to close the gap in support for businesses in Tier Two areas, the revamped support scheme is available across the UK.
The chancellor also announced additional funding to support cash grants for struggling firms of up to £2083.33 per month, mainly for businesses in the hospitality, accommodation and leisure sector. This will be retrospective for any region and claims can be backdated to August 2020.
For Self-employed people the size of the grant they can access will also be doubled to £3750 – with the amount of average profits they can claim for rising to 40% form 20%.
Employers will continue to receive the £1,000 Job Retention Bonus.
No changes have been made to the Job Support Scheme (JSS) for those businesses legally required to close.
If you are considering applying to the scheme, businesses in any tier need to conduct a thorough review of where hours can be reduced. Changes to contractual hours will need to be agreed and, as advised previously, employers must make sure their employees are clear on the new ways of working and the terms of the agreements.
We are still awaiting the formal guidance and will share this information with you as it becomes available.
Written by Marie-Clare Swallow, Senior HR Consultant
