Chancellor Announces Job Support Scheme
The Chancellor, Rishi Sunak, has today announced the next stage of the Government’s planned economic response to the Covid-19 pandemic. In doing so he recognised that people in the UK will be exhausted by the prospect of further Covid-19 restrictions. He explained that the Government had therefore been developing plans to protect jobs and the economy over the winter period.
In making the statement, the Chancellor highlighted that the resurgence of the virus poses a continued threat to any fragile economic recovery. He stated that the Government’s task was to move to a next stage, taking steps to nurture economic recovery by protecting jobs. However, he said that the underlying rationale of any Government scheme must be different. Whilst the primary goal remains unchanged – to support jobs, he explained that the way in which this would be done would have to change. In doing this, the Chancellor stated that the Government cannot save every business and cannot save every job. The intention behind the new measures was stated as being to protect viable jobs where possible.
New Job Support Scheme
The Chancellor announced the introduction of the new Jobs Support Scheme, intended to support the wages of people in work, by keeping them in a job, but with them working shorter hours, rather than making them redundant.
He reiterated that the intention is to support viable jobs – workers will be required to work 33% of their normal hours, and be paid for that work by the employer.
In return, he said in his announcement that the Government will cover 2/3rd of the worker’s wages.
However, on examination it appears that this means the Government will share the balance of the workers’ wages up to 2/3rds, meaning that they will pay 22% of a workers wage, with the employer contributing by paying another 22% on top of the 33% they will be paying for the hours worked. The employee will therefore receive 77% of their full wages, in return for working 33% of their normal hours. Employers will be paying 55% of the normal wages and the Government will be paying 22%.
Although it was not mentioned in the statement, the Government’s 22% contribution will be capped, in much the same way as the Furlough Scheme was. The maximum grant is capped at £697.92 per month.
The Job Support Scheme will be available to all small and medium size businesses. Larger businesses will be able to participate where they can show a fall in turnover as a result of Covid-19.
The new Scheme will run from 1st November 2020 for 6 months, to the end of May 2021.
Job Retention Bonus
The Chancellor also clarified that employers will be able to claim wage assistance under the new Job Support Scheme, and will still be able to claim the existing Job Retention Bonus of £1,000 (available for all furloughed employees).
This new scheme is significantly less generous than the Furlough Scheme, and represents a significant step back from the level of government support currently available until the end of October.
Employers will only be able to save the jobs of their furloughed employees where they have work available to cover a third of their employees’ hours and where the employers are financially able to pay the additional level of top up that will allow them to keep these employees in their jobs.
There will of course be employers who are approaching the end of the furlough scheme, who simply will not have one third of hours available. The scheme, whilst it will save some jobs, isn’t going to prevent many redundancies and will not stop an expected rise in unemployment.
Employers are however advised to consider the Scheme, and whether it would be a viable option for them, before making staff redundant. There is a risk that a failure to properly consider the Scheme could render a subsequent redundancy dismissal unfair, leading to liability for unfair dismissal claims
Specialist employment law advice
If you have any questions about the Scheme, or questions about how to manage redundancies following the end of the Furlough scheme, please do contact either Nick Jones or Cecily Donoghue for an initial confidential discussion. Call 0117 906 9400 or email email@example.com