Covid-19: Chancellor announces increased support for jobs (courtesy of Moore Barlow)
The Chancellor has announced plans to increase support through the Job Support Scheme, which is due to come into effect from 1 November. The Job Support Scheme will take over from the Coronavirus Job Retention Scheme (furlough) which will come to an end on 31 October.
When originally announced back in September, the Job Support Scheme would require employees to work and be paid for a minimum of 33% of their normal hours. The employer and the government would then each contribute 33% of the wages for the unworked hours and the employee would receive no pay for the remaining 33%.
The scheme has been amended so that the minimum hours requirement will be 20% instead of 33% and the employer contribution for unworked hours will be reduced from 33% to just 5%. This means that the government will provide up to 61.67% of wages for the hours not worked (subject to a cap of £1,541.75 per month).
As a working example: If someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.
The government has been under increasing pressure to help struggling businesses following the introduction of the 3-tier “lockdown” restrictions that limit the way in which members of the public are allowed to socialise in different areas. This is particularly the case in tier two areas (also known as High Risk areas) where businesses can remain open but members of the public cannot gather indoors with people outside their households, or meet outside in a group of more than 6. These restrictions will be increasingly problematic for pubs, restaurants and other hospitality industries as we head into winter and outside gatherings become less viable. As a result of these restrictions, companies in the hospitality sector argue that they would be financially better off if they were under tier three restrictions and forced to close, then becoming eligible for greater government support.
We are still waiting for the government to release further guidance with details about the Job Support Scheme, but in the meantime we would suggest that any employer who might need to rely on the scheme reviews its business plan and staffing requirements for the next six months. Any employee placed on the scheme will require an amendment to their contract of employment, similar to the furlough scheme arrangements earlier in the year.