In light of the government’s new coronavirus announcements this week, Jessica Clough takes a look at the extension to the Job Support Scheme aimed to help those businesses who are now legally forced to close.
The Job Support Scheme (“JSS”) replaces the current Job Retention Scheme ("JRS"), which is due to end 31st October 2020. The JSS, due to begin on 1 November 2020 and run for 6 months, is designed to assist employers of viable businesses to retain staff by contributing up to one third of the shortfall in wages for those employees who are on reduced hours. Further details on the JSS (as initially announced) can be found in our recent People in Focus article here.
On Friday 9 October 2020 the Chancellor announced that he would be extending the JSS to also provide support for those employers who were forced to close their doors for a period of time due to local or national coronavirus lockdown restrictions.
How will the extension to the JSS work?
This extension to the JSS is designed to support those businesses whose premises have been forced to close completely due to national or local Coronavirus restrictions.
Under the extension of the scheme:
The government will cover up to two-thirds of eligible employees' salaries (up to a maximum of £2,100 per month).
Employers will not be required to contribute towards employee wages, but will have to continue paying NICS and pension contributions.
Employees must be off work completely for a minimum of 7 consecutive days.
Employees must have been registered on their employer’s PAYE Real Time Information Scheme by 23 September 2020.
The extension to the JSS is also available for companies which were required to close their premises before 1 November.
Payments will stop when local restrictions are lifted.
The scheme is UK-wide so will also operate in Scotland, Wales and Northern Ireland. As with the JRS, payments will be made in arrears through an HMRC claims service – this is expected to be available from December 2020.
In addition, there will be an increase to the cash grants available for those businesses required to close their premises in local lockdowns. This grant will be increased to £3,000 per month (as opposed to £1,500 every 3 weeks under the JRS) and employers will be eligible to claim this grant after just 2 weeks of closure rather than 3 weeks.
The extension to the scheme will be reviewed in January 2021.
Why has the JSS been extended?
On Monday 12 October the Prime Minister announced the introduction of a new three tier system of coronavirus restrictions, as follows:
*this diagram is accurate as at publication of this article
Some areas of the UK, such as the Liverpool City Region, will begin their Tier 3 -High Risk restrictions from Wednesday 14 October 2020, which will require the closure of pubs and bars (except those serving substantial meals), gyms and leisure facilities, betting shops and casinos.
With the current coronavirus situation changing week by week, it is likely that further areas will be affected by this level of restrictions in the future.
It is also possible that further restrictions may be applied at a local level to “hotspot” areas and it has been speculated that this may include the closure of further types of businesses.
What can employers do now?
The extension to the JSS has been welcomed for providing support to those businesses forced to close because of lockdown measures, particularly to those in the leisure and hospitality sectors, who would not otherwise be able to benefit from JSS scheme as originally announced.
However, the JSS scheme will be no substitute for the JRS scheme for those employers who are not in areas covered by additional lockdown restrictions and for whom the downturn in the trade due to coronavirus has now made their business (or parts of it) “unviable”.
With the JRS scheme coming to an end in a few weeks, employers should review their workforces, pipelines and customer demand and make some difficult decisions. If it is unlikely that a role will be “viable” going forwards, then employers should remember their legal requirements under redundancy – and potentially collective redundancy – rules and take advice.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.