Rishi Sunak’s Winter Economy Plan
As the Coronavirus Job Retention Scheme (CJRS) nears the end on 1st November 2020, the UK government has formulated a new strategy to protect jobs and support businesses whilst we remain in a COVID-19 climate.
The CJRS, commonly known as the ‘furlough’ scheme, was implemented back in March 2020 with the aim of protecting employment and helping businesses to stay afloat on a national scale. The government provided funds to approximately 95% of firms within the UK which would be paid directly to the salaries of staff and business owners. This was to ensure that employees still retained their jobs and were not made redundant, they still received a steady income at a minimum of 80% of their wages pre-COVID-19 and businesses did not collapse automatically.
Over the past few months, the government’s monetary contributions have decreased, and employers have been required to make up the difference. This remains the same until November, where employers must pay the salaries of their employees and expenses solely on their own. However, with economic growth taking a U-turn and coronavirus cases rising with much uncertainty over the coming months, a new replacement scheme and changes have been announced to continue to support firms and retention of staff as we combat the spread of the virus.
On 25th September 2020, the Chancellor of the Exchequer, Rishi Sunak, unveiled a new package of changes to succeed the furlough scheme from 1st November 2020. The focus here is on the Job Support Scheme (JSS).
Job Support Scheme
From 1st November 2020, small and medium-sized businesses (SMEs) that are subject to a lower demand and turnover in the coming months can apply for the JSS. Larger companies can also apply if their average turnover has dropped because of the pandemic. The aim is to protect ‘viable’ jobs within businesses, and this will run for a period of six months.
Because of decreased demand, employees will be expected to work lesser hours than normal. Under this scheme, the government will contribute monetarily to the salaries of these employees working fewer hours.
Employers will pay for the hours their employees work. For their contractual hours not worked, the government and employer will then split the difference by each paying one third of their equivalent salaries. This means that employees will still receive two thirds of their full-time working salaries.
Employers are eligible to apply only if they can afford to employ their staff for at least 33% of their contractual working hours. The grant is capped at £697.92 per calendar month.
What remains unclear is for larger companies whose turnover has dropped because of COVID-19. There needs to be clarity on what the threshold is for the turnover of larger companies to qualify for the scheme. Equally, there is uncertainty around what is more financially feasible; whether to claim off the government and keep workers on part-time or lay off staff completely.
Upon comparison of the scheme with the CJRS, the JSS takes a more specific and focused approach. It predominantly targets SMEs as opposed to all businesses on a national scale and aims to reduce the wave of redundancies that may arise after the official end of the furlough scheme. This will be in the form of permitting employers to retain their workers by employing them on a part-time basis/ working fewer hours than the hours stipulated in their employment contracts. Hence, the JSS will not benefit those who have been made redundant nor secure the employment of all business staff.
Should you have any queries regarding the JSS or if you require legal assistance with your employment matters, please get in touch with a legal professional at Hudson McKenzie via email at email@example.com or by telephone +4(0)20 3318 5794.