Chancellor Announces Support for UK Businesses Through Winter

A new Job Support Scheme has been announced to launch 1 November and replace Coronavirus Job Retention Scheme.

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Written by: alcumus
24th September

Today, Chancellor Rishi Sunak announced how the Government plans to support UK businesses and protect jobs throughout the winter months. Their primary goal on this is to support “viable jobs” (where the employee is working at least 33% of their hours) and replace the Coronavirus Job Retention Scheme which ends 31 October.

Job Support Scheme

From 1 November the Government will be launching the Job Support Scheme, a new wage subsidy scheme, for 6 months.

To be eligible for this scheme, your employees must work a minimum of 33% of their hours. For the remaining pay of hours not worked the Government and employer will each pay 1/3, with a cap on the Government grant of £697.92.

So, if an employee works 33% of their hours, they will receive at least 77% of their pay.

A worked example of what this means is:

An employee is paid £3k/month. They work 1/3 of their hours and receive 1/3 of their pay (£1k) for that as normal. They lose £2k from not working the other hours, so the Government will pay 1/3 of that (£666) and the employer the other 1/3 (£666). So the employee gets £2,333 (77%) of their wages for working 1/3 of their hours. The employer pays £1,666 (so 55%) and the Government pays £666 (22%).

This scheme applies to all small and medium sized businesses (usually up to 250 employees) and only applies to large businesses “where turnover has fallen through the crisis” -  we are not sure yet exactly how this will be defined.

Mr Sunak explained the scheme will be open to all employers across UK, even if employees were not furloughed previously. Any employer who takes up this scheme will also still be eligible for the Job Retention Bonus if they use the new scheme to bring workers off furlough.

The information issued so far includes the sentence: "The employee must not be on a redundancy notice", which suggests that the government will not contribute anything under the Job Support Scheme if an employee is working under notice of redundancy. That is in contrast to the position under the Coronavirus Job Retention Scheme, where the scheme did pay out for employees working their redundancy notice.

The Job Support Scheme Factsheet states:

  • To be eligible, employees must have been on the employer's Real Time Information submission on or before 23 September 2020.
  • The minimum 33% threshold hours for which an employee must work may be increased in months 4-6 of the scheme
  • Working patterns can vary, but each short-time working arrangement must cover a minimum period of seven days
  • The government's grant will not cover Class 1 employer NIC or pension contributions, although they remain payable by the employer
  • 'Usual wages' will follow a "similar" methodology to the CJRS

This will be positive news for many employers. If you were previously looking at redundancies as a result of the pandemic, you now need to consider if this scheme will have any impact on your decision making and will need to discuss which of your roles are “viable jobs”.

We will provide an update as information is released.

Other announcements to help businesses

Mr Sunak also made some announcements on other areas the Government are helping businesses:

  • Extension of the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The initial lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875. An additional second grant, which may be adjusted to respond to changing circumstances, will be available for self-employed individuals to cover the period from February 2021 to the end of April 2021.
  • Kick Start Scheme – he gave a reminder of the new kick start scheme for 16 to 24 year olds and further information regarding this scheme can be found on the Government website.
  • Extension to the Bounce Back Loans, giving more time to pay back and called it ‘pay as you grow’. The length of the loans has been extended from 6 to 10 years, will be interest only payments and businesses can suspend payments for up to 6 months with no impact on credit rating.
  • The Coronavirus Business Interruption Loans will see extended repayment to 10 years and the tax bills deferment which were due in March 2021 will be amended now so businesses can spread VAT bill over 11 smaller payments with no interest.
  • The Hospitality and Tourism industry will see VAT rates remain, with the lower VAT rate extending to 31 March 2021.

If you need any assistance, please do not hesitate to contact the Alcumus PSM HR team for assistance via email [email protected] or call us on 01484 439930.

Alcumus PSM (People & Safety Management) specialises in human resources (HR) and health and safety (H&S) consulting for small and medium-sized enterprises.