24 Sep 2020

Earlier today (24 September), the Chancellor made a statement in the House of Commons regarding a new Job Support Scheme, which forms part of his wider Winter Economy Plan. Designed to protect viable jobs as we move into the difficult winter period, the scheme will mainly assist SMEs. Unlike its predecessor - the Coronavirus Job Retention Scheme (CJRS) – this scheme comes with several conditions.

Following his statement, the Chancellor answered questions in the Commons and gave some more information. As is normal, additional particulars have since emerged via the Treasury's Twitter account and they have now published a factsheet. The details we have so far are:

  • The scheme will run from 1 November 2020 to 30 April 2021
  • It will be open to all employers, including those who have not used the CJRS
  • Employees must have been employed as at 23 September in order to be eligible
  • It will support employees working on shorter hours: the employee must work for a minimum of one-third of their normal hours for the first three months. The Government will review this threshold and may increase it for February, March and April. The employer must pay the employee as normal for the hours they work, as well as paying National Insurance contributions and pension contributions
  • The Government and the employer will jointly cover two-thirds of the pay lost, meaning an employee working one-third of their usual hours will be paid 77% of their usual pay
  • The employee will keep their job and cannot be made redundant or given notice of redundancy while their employer is claiming a grant
  • Support will be targeted at SMEs. We will need to see how SME is defined; the usual definition is a business with fewer than 250 employees but a different measure could be used
  • Larger businesses will only be able to claim if their turnover has been adversely affected by COVID-19 and they will be subject to restrictions on capital distributions to shareholders (eg dividends) while they are using the scheme
  • The Government contribution will be capped at £697.92 per month
  • The job retention bonus (under which employers who take an employee back from furlough and fulfil certain criteria will be able to claim a grant of £1,000) will be available to employers who use this scheme.

Further guidance is expected to be published shortly.

Given past experience with the CJRS it will be important to examine the fine details of the above key points once guidance is available. One point that will need to be considered very carefully is the condition that an employee cannot be made redundant or given notice of redundancy if their employer is claiming a grant – it is not yet clear as to whether an employer could cease claiming the grant going forward should it need to enter into redundancy consultation or whether it would have to repay the grant in full. Therefore employers who may need to make redundancies will need to look at the detail before deciding to use the scheme.

Any scheme that protects jobs is likely to be welcomed by employers, unions and employees, although the initial reactions from unions suggest that they view the scheme as being insufficient and the Government may come under pressure to do more. Additionally, the scheme will do little to help businesses in sectors that are unable to operate at all at the moment, such as events, entertainment and sport, or where there is not enough work for employees to do at least one-third of their usual hours. It will also be of little assistance in the event of local lockdowns or the worst case scenario of a second national lockdown. Similarly, it appears that employers will not be able to use the new scheme in respect of employees who were previously shielding and who cannot safely return to work.

Lastly, employers who were intending to make 100 or more people redundant when the furlough scheme ends would have had to begin consulting with employee representatives last week. They will need to review their proposals in the light of the Job Support Scheme and consider whether planned redundancies can be avoided. Indeed, there may be an argument that dismissals are unfair or consultation has been insufficient if employers do not at least consider their options under the scheme.