A Cynic’s Guide to the New Job Support Scheme (UK)
Stung by the greatly lower take-up for the Job Support Scheme than expected, surely a surprise to no-one who had actually read it, the government has moved this week to address two of its key shortcomings – first, the JSS required there to be work enough available to justify at least a third of the employees’ normal working hours, and second, it cost employers more to use the Scheme than not and more to retain people than to make them redundant. As a job preservation scheme, JSS v.1 therefore had its limitations.
V.2, or “JSS Open” (because it covers businesses that are not compulsorily closed) is much nearer to what it should have been first time around.
The basic principle is unchanged – the employer must provide and pay for a minimum level of work for the employee, but this is sharply down from 33% to 20% of his normal working hours. Of those unworked hours, up to 80% of the employee’s normal week, the employer now has to pay only 5% while the government pays 61.67%, so two-thirds altogether, in each case instead of the previous 33%. The government contribution is, however, limited to £1,541.75 per month gross, the equivalent of £37,500 per annum and so effectively the same cap rate as applied previously. The Scheme is open to SMEs (less than 250 employees) and to larger companies which can show adverse financial impact from the pandemic.
Therefore an employee on £37,500 or less will be paid at least 20% plus [66.67% x 80% = 53.33%] = 73.33% of his salary. This is fractionally off the original minimum 77%, but Universal Credit may be available to supplement this for the lowest earners. The employer must also carry pension contributions and NI costs.
The employer’s 5% is capped at £125 per month, says the accompanying Fact Sheet, but at the same time (in fact, in the same paragraph) we also see that it can top up above that 5% if it wishes to do so. In other words, if the employee normally earns £4,000 per month, then his JSSO pay at 20% occupied will be at least [20% x £4,000 = £800, plus £125 from employer and £1,541.75 from the government] = £2,466.75 per month, some way short of the headline 73% touted by the government. The employer can top up its £125 contribution to make up some of that shortfall, but is not obliged to do so.
The conditions around entitlement to the new JSSO support are otherwise unchanged, as are the requirements that employers must have “agreed” the temporary working arrangement for those even shorter hours and notified them in writing to the affected employees.
Workplace training will count towards the minimum 20% working week. The JSSO Fact Sheet is a veritable treasure-trove of punctuation errors and sub-GCSE grammar, but sadly sheds no light on whether the same applies to holidays or sick leave. Our guess is that it will do so, on the joint grounds that (i) that was how the CJRS worked; (ii) sickness and holidays are ordinary incidentals of the employment relationship; and (iii) the administrative hassle of weeding them out from what might already be as little as a one day week would be beyond both HMRC and most SMEs. It is, however, clear that no JSSO benefit can be claimed in respect of any notice period given by the employer, whether it is worked or not.
The JSSO will make a very significant difference to both the attractiveness of the support scheme and the number of people caught by it. It is just regrettable that so many employers will have made their plans and notifications to staff based on the first version, safe in the knowledge that the government would not amend something so important so significantly within less than a month and before it had even started. After all, that would never happen, would it?