How supportive is the Job Support Scheme?

The JSS will run from November 2020 to April 2021. It is premised around employers paying employees normal pay for hours worked (which must be at least 33% of their usual hours), and two thirds of the hours that are not being worked being covered by the government and the employer, meaning that the employee working a third of their hours will be have pay that is topped to at least 78% of their normal wages (unless this is reduced by the government cap of £697.92 a month).  

The detail about the rules of the new JSS that we have so far can be found here but the table below from this guidance is most helpful in terms of understanding the maths:

The Government plan to publish more detailed guidance – although it is unclear when this will be. 

Which employers can use the JSS?

The scheme will be open to all employers with a UK bank account and part of PAYE. All SMEs will be eligible. Large businesses must show that turnover has fallen because of Covid-19 before they can participate – and will also be expected not to pay dividends out to shareholders whilst utilising the JSS.

Clarification is needed on the relevant definitions for SMEs and large employers. The approach to large employers also seems to assume that those who have made it through the first 6 months of COVID well, will continue to do so in unchartered economic times.

Employers will still be able to claim the Job Retention Scheme bonus and access the JSS.

Which employees can I put onto the JSS?

Any that were on an RTI PAYE submission on or before 23 September 2020. This includes workers on zero or casual hour contracts, with guidance to follow about the calculations for those with variable working patterns (although this is likely to replicate the CJRS approach in some way). They do not need to have been previously furloughed.

Will it be flexible?

It would seem so. You can cycle on and off JSS with each short-time working arrangement only having to cover a minimum period of 7 days. The limits to flexibility are more likely to be practical i.e. what your payroll team can handle and the need for the employee to understand what they will work and be paid.  

It is also worth noting (possibly with some alarm), that the Government will consider increasing the minimum percentage of hours that must be worked to claim the JSS from 33% after the first 3 months of the scheme.

What do I need to do with regard to employees if I want to use the JSS?

You will need to take similar steps to those taken when you agreed furlough with employees. You are still effectively seeking agreement from employees to work and be paid less than they are entitled to under their contract. In many cases you will be seeking agreement to this as an alternative to redundancy. This all requires consent which should, ideally, be sought and given explicitly in writing but which you could probably achieve (with limited risk) by way of confirmation in writing to the employee after verbal agreement.

With the CJRS we have seen some issues arise where employees (understandably) did not really understand what pay they were agreeing to receive, albeit that for the main part the CJRS was so generous in a crisis situation that it has not led to significant claims (so far).

The JSS is far less generous and the caps could mean that employees will take home less than they were expecting, although it remains unclear if the employer's contribution is capped like the government's or if they need to make up the shortfall where the cap is hit. Where at all possible, example calculations for working patterns should be provided in order to avoid dispute or unintended misleading of employees about what they will actually be paid. This will be far easier to do where you are treating large groups in the same way.

Can I use the JSS to reduce the costs of notice periods for those I make redundant?

No. Unlike the CJRS, the new JSS cannot be used to subsidise notice pay.

If you are part way through, or are planning to start, a collective or ordinary redundancy consultation, it is important to recognise that you will need to demonstrate you have considered whether the JSS could work for your business to avoid or reduce redundancies. This should be a subject for explicit discussion in consultation meetings.

If you have recently made redundancies, re-engaging employees and placing them on the JSS is unlikely to be practical as the employee will need to have been on payroll as at the 23 September 2020. It may, however, be possible to rescind notice of redundancy if employees are currently working their notice periods and the JSS is a good option for the business compared to redundancy. We will need further clarification in the rules to see whether it is possible to make this work. It is also not clear yet what the situation would be if the business uses JSS for a period, then later makes those roles redundant.

How can I work out if the JSS is suitable for my business?

Unless you have the cash reserves and the inclination to be purely benevolent to your employees, the JSS is only going to be worthwhile for your business where:

  • You have not already effected your job cuts. Many have done so already in the face of the government's previous insistence that the CJRS would not be extended at all (when some would argue this is a form of continuing diminishing government contribution to something that looks much like the furlough scheme).
  • You have some work for employees to do. For those businesses currently unable to really operate at all or in any way close how they would ordinarily, such as in the arts and entertainment sectors, the JSS doesn't really work.
  • You have some confidence (or are willing to gamble) that the work levels will pick up after April 2021. Otherwise, keeping two employees on short-time working hours and paying more for those hours is unattractive and making redundancies at this stage to reduce your employee numbers on a longer-term basis would make more sense.
  • You are concerned with roles earning less than circa £38,000 per year. Otherwise it seems the caps (so far as we understand how these would impact) would mean that the cut in earnings would start to be too great to secure employee's agreement.

We will provide further guidance and insight as soon as the JSS scheme rules are published.

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