While the UK furlough scheme ends on 31 October 2020, there’s new job support available for some businesses. The UK government recently announced its Job Support Scheme (JSS), and it starts on 1 November. But who actually benefits under the scheme, and does it go far enough to save jobs? Let’s break it down to find out.
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How does the Job Support Scheme work?
The JSS will replace the furlough scheme and run from 1 November 2020 until 30 April 2021. It’s designed to help keep people in jobs even if businesses are less busy than usual due to coronavirus.
So, how does it all work? Well, it’s a little complicated.
First, someone must be working at least a third of their usual hours to qualify for the JSS (unless there’s a local or national lockdown restriction in place, which we’ll get to in a moment), and they’ll be paid as normal for these hours.
Next, the UK government and the employer work together to cover some of the shortfall in hours worked. For every hour of work lost:
- The UK government and the employer will each pay a third of the hourly wage.
- That said, the UK government won’t pay more than £697.92 per employee per month.
- There’s no support for the remaining third (so the employee loses a portion of their hourly rate).
That’s a lot of thirds. But basically, workers still earn at least 77% of their usual wage under the scheme.
Okay, so that’s how the basic JSS works, but where do the latest announcements fit in? Let’s take a look.
What about businesses forced to close due to coronavirus?
If you must close your business due to national or local coronavirus restrictions, there’s new job support available. The idea is to help viable businesses ‘weather the storm’ and survive a few weeks (or a few months) in lockdown.
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- It doesn’t matter what sector you’re in. If you’re forced to close due to coronavirus restrictions (or if you haven’t legally been able to reopen at all yet) you can apply.
- The UK government will support each employee by paying 67% of their salary.
- This support is capped at £2,100 per employee per month.
- Employers won’t need to pay wages during this time. They’ll only have to cover NICs and pension contributions, where applicable.
This support kicks in from 1 November 2020 and runs until 30 April 2021. So it’s basically an ‘expanded’ support scheme.
It’s not yet clear what support – if any – will be available after this point. But it’s still welcome news for employees right now who might be worried about job security as coronavirus lockdowns roll out across the country.
Remember, too, that you can apply for cash support under the Local Restrictions Support Grant Scheme if you’re forced to close your business. Businesses under local or national restrictions can claim up to £3,000 per month after two weeks’ closure.
Where does the Job Retention Bonus fit in?
The Job Retention Bonus is another key development. It’s an incentive for businesses to keep employees on the JSS rather than making them redundant.
- From 15 February 2021, businesses can claim a £1,000 taxable bonus for every employee kept on the books.
- If you take someone off the JSS at any point between now and 15 February 2021, you can’t claim the bonus for them.
- You must pay an employee at least £1,560 per month between November 2020 and January 2021 to apply.
Does the scheme go far enough to protect jobs?
Okay, so the scheme does have its plus points. But it’s not without its flaws:
- Since payments are made in arrears, you need the cash to make the initial payments to your employees. This may cause cash flow problems. For example, you claim in December for wages you paid in November, and so on.
- For many people, 67% of their wage will not be enough to live on. This is especially relevant for businesses with no prospect of opening any time soon (e.g. nightclubs and theatres).
- There’s no support for business overheads (e.g. supplier costs and leasing).
- If you’re a supplier to a business that’s forced to close, you’re not covered under the scheme. This indirectly puts many jobs at risk.
Okay, so we covered a lot of ground there. Let’s review the key points:
- Employees get 77% of their wages under the new JSS, the replacement for the furlough scheme.
- The extended support scheme gives employees 67% of their wages if the business they work for shuts due to local or national restrictions.
- Businesses under lockdown restrictions can claim up to £3,000 a month in cash support.
- The Job Retention Bonus kicks in from 15 February 2021.
- You can start applying for support from 1 December 2020, because it’s paid in arrears. You can apply through HMRC.
While UK unemployment is now at a three-year high, the JSS goes some way towards protecting jobs as the coronavirus pandemic continues. However, many workers – and businesses – will fall through the cracks. For all of us, protecting our finances has never been more crucial.
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