Goodbye Furlough… New Job Support Scheme to take over from November

HomeInsightsGoodbye Furlough… New Job Support Scheme to take over from November

As many of you will already have heard, the Chancellor of the Exchequer, Rishi Sunak, has today announced a new ‘Job Support Scheme’ (JSS) which will run for 6 months from 1 November 2020 and will take over from the existing ‘Coronavirus Job Retention Scheme’ (CJRS) which will finally come to an end on 31 October 2020.

Given the increased national COVID restrictions announced by the Prime Minister earlier this week (which are also set to last for the next 6 months), some form of employment support scheme was perhaps inevitable and today’s announcement follows considerable pressure on the government to provide further support to employers and employees during the tricky winter period ahead.

In summary, the aim of the JSS is to keep people in “viable” jobs by allowing employees to work shorter hours and supporting employers with the wage cost for hours that aren’t worked.  Provided that an eligible employee works a minimum of 33% of their hours (which would be paid for by the employer), the employee will be paid 2/3rds of their pay for the hours they don’t work (subject to the cap mentioned below) with the government and the employer splitting the cost of this.

The Chancellor also announced today that the Self-Employment Income Support Scheme will be extended on similar terms and conditions to the JSS, which will be a welcome relief to many.

The JSS – what do we actually know?

Details are still thin on the ground (further guidance will apparently be published ‘shortly’) but at present we know the following:

  • The JSS will be open to all employers across the UK even if the employers have not previously made use of the furlough scheme;
  • While all small and medium sized companies will be eligible, larger companies will only be eligible if they can show their turnover has fallen as a result of Covid-19;
  • Large companies that do make use of the JSS will have restrictions on the capital distributions they are able to make to shareholders and will apparently not be able to give redundancy notices to employees while they are participating (a key difference to how things currently work with furloughed employees);
  • Companies retaining furloughed employees on shorter hours can make use of the JSS and also claim the CJRS announced previously (in summary, a £1,000 payment for each furloughed employee who remains in employment on 31 January 2021);
  • The government’s contribution will be based on an employee’s usual salary, capped at £697.92 per month.

The unanswered questions

On the face of it, the new JSS looks to be relatively straightforward and is clearly much more affordable for the government than the current CJRS.  However, the devil will naturally be in the detail and the announcement raises a number of questions:

  • Will the JSS apply to employees and PAYE workers (as the CJRS does) or will it be limited to those regarded as ‘employees’ for employment law purposes? As it will be administered by HMRC presumably on the basis of payroll records, we would assume that it will apply to both employees and PAYE workers like the CJRS.  This question will be of critical importance to any of our Film and TV clients hoping to utilise the scheme;
  • How will an employee’s normal hours/pay be calculated? We hope for all of your sakes that the government scraps the convoluted method of calculations used in the CJRS;
  • Will the cap on the government’s contributions mean that employers will need to top up the difference or will employees simply receive a lower rate of pay? We suspect the latter, given the former could make the JSS unaffordable for some employers;
  • What criteria will be used to determine what is a small/medium or a large company? We expect a simple mechanism will be used (such as number of employees or a profit/turnover threshold) but it will be crucial to have clear guidance on this given the potential difference in how the JSS will operate for different sizes of company;
  • How will the eligibility of large companies be determined and, in particular, what impact on turnover will need to be demonstrated? What evidence must be provided of this?
  • Will the redundancy restriction extend to consultation rather than simply serving notice and will there be any similar restrictions on small/medium sized companies?

We truly hope that when it appears, the formal guidance addresses all of the above questions and any others that materialise in the coming days.  However, as those of you familiar with the CJRS guidance will know, there is clearly the potential for this to generate more questions than it answers!

We will analyse the formal guidance as soon as it is published and will then look to provide a more detailed briefing focusing particularly on how we consider this will affect our clients within the media and technology sectors.  However, if you have any immediate questions, please do not hesitate to reach out to us: