The Job Security Scheme – announced 24 September 2020
The Chancellor has announced his “Furlough 2.0” – a wage subsidy programme called the Job Support Scheme (“JSS”). The aim, of course, is to help UK employers weather the continuing COVID-19 storm, with the hope of saving jobs or at least staving off mass redundancies when the current furlough scheme comes to an end on 31 October. Helpfully, employers who have not previously used furlough can benefit from JSS and employers who retain staff under JSS can also claim the £1,000 job retention bonus. However, unlike the blanket approach of the Coronavirus Job Retention Scheme, JSS has a more nuanced and focused approach. First, it appears to target small and medium sized businesses (“SMEs”), with larger companies only able to benefit in certain circumstances. Secondly, the JSS will only be available for employees who are working a proportion of their time, and will not benefit those laid off entirely. Importantly, employees on JSS can’t be made redundant/put on notice by the employer during a period when the employer intends to claim. In addition, Government support is now set at a maximum of up to 22% of an employee’s capped wages, as opposed to 80% at the start of furlough.
The scheme will run for six months from 1 November 2020 and is available to employees whose hours have been reduced due to decreased demand, provided they are working at least a third of their normal working time. The employer will pay the portion that is worked and for the hours not worked, the employer and the government will pay a third each, with the Government portion based on salary capped at £697.92 per month. All SMEs will be eligible to participate in the Scheme, however large companies will only be eligible if their turnover has fallen due to COVID-19. We await further detail on the level at which the turnover threshold is going to be set. Further information can be found on the Job Support Scheme factsheet, which can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/921389/Job_Support_Scheme_Factsheet.pdf
The Scheme has parallels with similar concepts already up and running successfully in other countries, including Germany’s “short time work” scheme (which provides workers whose hours have been reduced with a top-up from the German government) and France’s “unemployment scheme” (in which the French Government has agreed to pay 93 percent of an employee’s net salary regardless of whether they are working full time). Given there are currently over two million UK employees still on furlough and with the R number on the rise, this announcement is a timely one for UK SMEs.
Much remains unclear as regards the JSS and, as we saw with the furlough scheme, the devil is often in the detail and the resulting legislation can often differ in important respects to what appears to be the case from the Government announcements. Whether the JSS will be enough to stave off the wave of redundancies that has been predicted remains to be seen. It is clearly less generous for employers than the furlough scheme as they will need to meet the lion’s share of their employees’ pay for reduced work and offers no assistance to employees for whom there is no significant work available. As such, a reduction in the scale of redundancies seems more likely than avoiding them entirely.
Support for self-employed individuals
The Chancellor has also unveiled new support measures for self-employed individuals.
Firstly, self-employed individuals and other tax payers who require extra time to pay taxes that are due, can now extend the date for payment of their outstanding tax bill for 12 months from January 2021. This builds on the existing Self-Assessment deferral provided by the UK Government in July 2020 and will allow taxpayers who have up to £30,000 of Self-Assessment liabilities due to use HMRC’s self-service “Time to Pay” facility.
Secondly, the grant available through the Self-Employed Income Support Scheme (“SEISS”) has been extended and will run from 1 November 2020 to 30 April 2021. The grant will be available to self-employed individuals who are currently eligible for SEISS and are continuing their trade but face a decreased demand due to Covid-19. From 1 November 2020 to 31 January 2021, the UK Government will cover 20% of average monthly trading profits in the form of a grant. From 1 February 2021 to 30 April 2021, the UK Government will provide a grant, although the level of this is yet to be determined.
On 8 July 2020, the UK Government announced that registered businesses were permitted to apply a temporary 5% reduced rate of VAT to certain supplies relating to i) hospitality, ii) hotel and holiday accommodation and iii) admissions to certain attractions. The Chancellor has announced that the temporary reduction of VAT rates would be extended until 31 March 2021 for the tourism and hospitality sectors. This further measure has been implemented by the Government with a view to protect around 2.4 million jobs and ease the significant financial burden on UK businesses in these sectors.
If you would like to discuss the changes announced by the Government and how they might affect your business, please get in touch with your usual Employment Department contact.