UK: Changes To The Job Support Scheme Announced By The Treasury

Employers' contribution to the wages of workers on the scheme significantly reduced.

HM Treasury announced changes to the Job Support Scheme (JSS) on 22 October which may make a significant difference on employer take-up of the scheme. A new 'Job Support Scheme Open Factsheet' provides a good overview of the changes here. For more in-depth information, there is also the related "policy paper" which introduces new monikers for the JSS (to be known as "JSS Open") and the JSS Extension (to be known as "JSS Closed") here. We take a look at these changes below. Further guidance is expected at the end of October.

What were the rules of the JSS?

We explored the rules and eligibility criteria of the JSS in our article The new Job Support Scheme: what is it and will it be enough? Which is available on our website (here).

One of the key takeaways from the JSS was that if eligible workers worked a minimum 33% of their 'usual hours' they would receive 77% of their 'usual pay'. The employer was then able to apply for funding from the government, who would pay 22% of the usual pay up to a cap of £697.92, meaning the employer paid 55% of the worker's usual wages.

The level of support provided by the government has now significantly changed.

What's changed?

The minimum amount of time a worker must work to qualify for the JSS has now dropped to 20% of 'usual hours'. More significant is the change in the amount of support the employer and government give in respect of the unworked hours. Employers are now expected to pay 5% of the unworked hours cost up to a cap of £125 per month (reduced from 33% of the unworked hours cost), while the government will pay 61.67% of the unworked hours (increased from 33%) up to a cap of £1,541.75 per month.

According to the government's latest factsheet (linked above) the contributions and caps are based on a reference salary of £3,125 per month. On this basis, at the minimum eligibility requirements, workers will receive 73% of their usual wages for working 20% of their usual hours. However, as with the previous iteration of the JSS, the employer is still responsible for paying all Class 1 NICs and pensions contributions on the total pay.

More clarity on important details

The previous factsheet for the JSS suggested (though it wasn't clear) that the government did not want employers to top up the wages of any workers who were on the JSS, but the latest factsheet has confirmed that employers can top up the pay of workers' placed on the JSS at their discretion, meaning they can pay above the 5% / £125 cap towards unpaid hours if they wish.

In addition, the latest Factsheet confirms claims may be made from 8 December. As before, claims will be submitted via an online portal through gov.uk. Clarity has also been given to "fully publicly funded" organisations that they are not expected to use the JSS, but "partially publicly funded" organisations are eligible where their private revenues have been disrupted.

As far as we are able to tell, all other eligibility and terms remain, including that an eligible worker must show on an employer's Real Time Information submission via PAYE on or before 23 September 2020 and the requirement that no eligible worker must be made, or receive notice of, redundancy for any period in which the employer will claim support under the JSS in respect of that worker.

Full guidance on the JSS has yet to be released.

Comment

These changes to the proposed JSS will no doubt be welcomed by employers from all sectors. When the JSS was initially announced it signalled a significant reduction in the amount of support from government to employers than was available under the Coronavirus Job Retention Scheme.

However, it appears that the government has now reassessed the situation given the current trend towards higher Covid-19 infection rates and increasingly tough measures being taken to lockdown areas of the UK.    

Many employers will of course already be undertaking redundancy consultation and these significant changes to the scheme at this late stage may cause confusion for employees and employers going through that process. Employers who are proposing job losses should consider alternatives to redundancies and ways to reduce and mitigate their effect. It will therefore be important that employers reconsider whether the JSS now provides such an alternative for some of those who may have been at risk of dismissal.

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