Employment Law Update - Job Support Scheme
The Government has now announced significant changes to the intended Job Support Scheme. The basic principles of the Scheme, such as the 6 month running period starting on the 1st November and the eligibility criteria for businesses, remain the same as set out in our previous explanation (https://www.daviesandpartners.com/news-events/427-employment-regulatory-law-update-move-over-furlough-leave).
However, there are a number of key changes that have been implemented to offer greater support to businesses. These changes are available across the UK and are not limited to businesses located in high-alert level areas. The significant details which have so far been announced are:
• The required minimum number of normal working hours that an employee must work has been reduced from one-third to 20%, during which time employers must still pay the contracted wage. Therefore, if an employee previously worked for 5 days a week, they would now only need to work 1 day to become eligible.
• For the employee’s unworked hours, the contribution to be paid by the employer has been reduced from one-third to 5%. The contribution to be paid by the government has increased to 61.67% of the unworked hours, up to a maximum of £1,541.75 a month. Employees will still be expected to give up the final one-third of their wage.
• Employers using the Scheme will still be able to claim a job retention bonus for each employee meeting the eligibility criteria, which is worth £1,000 per employee.
In addition to the above, the grants available to self-employed individuals have also doubled to 40% of previous earnings, up to a maximum amount of £3,750 over a 3-month period.
Business grants will also now be available of up to £2,100 per month. These grants are intended for businesses adversely impacted by restrictions in high-alert level areas, and are primarily aimed at businesses in the hospitality, accommodation or leisure sector. They are available from local authorities, who will receive funding and determine which businesses in their area are eligible.
The previously announced Scheme had been much criticised as not being very attractive to employers. Indeed, it was only in very rare circumstances when employers would have used it. As a result of the ongoing march of more restrictive measures for more and more of the population, the Chancellor has been forced into a re-think and to introduce this much more generous Scheme, which will of course also increase our long-term national debt! The Scheme will be attractive where employers anticipate a short term major decline in work being available, but that this will reverse once restrictions are lifted. If employers don’t see the demand returning, then redundancy is a more obvious step. If employers see a medium to long term requirement but at a lower level, they may think it more prudent to agree a contractual variation to the employee’s working hours.
Nigel Tillott - Head of Employment