On 24 September 2020, UK Chancellor of the Exchequer Rishi Sunak announced new measures to support businesses and workers affected by the ongoing coronavirus crisis. The announcement came after UK Prime Minister Boris Johnson declared a tightening of coronavirus restrictions in England on 22 September 2020.
Central to these measures is a new Job Support Scheme that will commence operation on 1 November 2020. The scheme is designed to protect viable jobs in businesses that are facing lower demand over the winter months due to COVID-19. The scheme will therefore be welcomed by businesses that want to maintain employees’ jobs after the Coronavirus Job Retention Scheme (CJRS) ends on 31 October 2020. Neither the employer nor the employee needs to have previously used the CJRS to use the scheme.
To qualify for the scheme, employees must have been on an employer’s Pay As You Earn (PAYE) payroll system on or before 23 September 2020. Employees must also work at least 33 percent of their usual hours. (The government may increase this minimum hours threshold after three months.) Employers will continue to pay employees their normal contracted wages for the hours they work. For the hours not worked, an employer and the government will each pay one third of an employee’s usual pay. The government contribution will be capped at £697.92 per month. Therefore, as long as the employee’s earnings fall under this cap, the employee should receive a minimum of 77 percent of his or her normal pay (on the basis that the employee is working 33 percent of his or her hours)—55 percent paid for by the employer, 22 percent by the government. Class 1 employer national insurance contributions and pension contributions are still payable by the employer.
It is also worth noting that an employee cannot be made redundant or be put on notice of redundancy during the period within which their employer is claiming under the scheme.
The scheme will run for six months and is open to employers across the UK. Small and medium-sized enterprises (SMEs) are automatically eligible to apply, whilst large businesses will be required to demonstrate a reduction in turnover due to the pandemic.
Employers that use the Job Support Scheme will also be able to claim the Job Retention Bonus, whereby the government will pay employers £1,000 for every employee furloughed under the CJRS that is subsequently brought back to work, provided the employee remains employed until at least 31 January 2021.
Ogletree Deakins will continue to monitor and report on developments with respect to the COVID-19 pandemic and will post updates in the firm’s Coronavirus (COVID-19) Resource Center as additional information becomes available. Important information for employers is also available via the firm’s webinar programs.