With the Coronavirus Job Retention Scheme coming to an end on 31 October and further restrictions announced by the Government, Rishi Sunak has announced a Winter Economy Plan.
The Winter Economy Plan includes measures aimed at helping workers and employers affected by the ongoing coronavirus crisis, including a new Job Support Scheme which will contribute to some employees' wages; a limited extension of the Self-Employment Income Support Scheme; an extension of the temporary 15% VAT cut for the tourism and hospitality sector and further flexibility to repay Bounce Back Loan and Coronavirus Business Interruption Loan.
Winter Economy Plan - Job Support Scheme
The Winter Economy Plan includes another support scheme to avoid mass redundancies (the Job Support Scheme) for employees who are able to return to work on a part-time basis, but who need more time for demand to recover to be able to return full-time.
The Job Support Scheme will open on 1 November 2020 and run until 30 April 2021, subject to both the employer and employee meeting the eligibility criteria below. Under this scheme, employees will receive their normal salary for any hours worked but will only receive 2/3rd of their salary for any hours not worked. The cost of the hours not worked will be split between the employer, the Government and the employee as follows:
- The Government will pay a third of the hours not worked up to £697.92 a month;
- The Employer will pay a third of the hours not worked; and
- The Employee will take a salary reduction for a third of the hours not worked.
The Government has been clear that they do not expect employer’s to top-up their employees’ wages above the two-third contribution for any hours not worked, however the employer will remain liable for NICs and pension contributions.
Employers must agree any new short-time working arrangements with their employees and notify the employee in writing of such agreement and any changes to their employment contract accordingly.
One notable point about the Job Support Scheme is that employees cannot be made redundant or be put on notice of redundancy whilst their non-working hours are being claimed through such scheme.
Although more detailed guidance is due to be published shortly, for an example of how this may work in practice please see page 4 of the Government’s fact sheet available via gov.uk by clicking here.
A grant for self-employed workers will be extended on similar terms.
Eligibility for the Job Support Scheme
The Job Support Scheme will be open to all employers if they have a UK bank account and UK PAYE scheme. The Job Support Scheme is intended for businesses whose turnover is lower now as a result of COVID-19.
“Large businesses” will have to undertake a financial assessment to ensure eligibility and will be expected to not make any dividend payments or share buybacks whilst accessing the Job Support Scheme. Although no specific description has been provided yet for what constitutes a “large business”, the Government have confirmed that no such financial assessment will be necessary for small or medium enterprises (SMEs).
Employees will be eligible for the Job Support Scheme if they are:
- On the employer’s payroll (i.e. a RTI submission has been made to HMRC) on or before 23 September 2020;
- Working at least 33% of their usual hours; and
- Each short-time working arrangement covers a minimum period of seven days.
Employees will be able to be take turns accessing the Job Support Scheme, and do not have to have the same working pattern each month. It is worth noting however that the minimum working hours is only in place for the first three months (until 31 January 2021), before which the Government will consider whether it is necessary to increase the minimum working hour criteria.
Neither the employer nor employee needs to have previously used the Coronavirus Job Retention Scheme, and any claim under the Job Support Scheme will not affect your entitlement to the Job Retention Bonus (if you meet the eligibility criteria).
New changes for the Job Support Scheme - Announced on 22nd October 2020
As of 22nd October 2020, Chancellor Rishi Sunak has announced amendments to the Job Support Scheme, due to begin on 1 November 2020.
The new changes will reduce the employer’s contribution towards those unworked hours, reducing from the initial 33% to 5%. Changes to the JSS are shown below:
- For every hour not worked, the employer must cover at least 5% of the employee’s usual pay
- For every hour not worked, the Government will cover 61.7% of employee’s usual pay. This has ben capped at £1541.75 per month
- Employees are required to work at least 20% of their usual hours, therefore, making those working just one day a week eligible.
An update on the hospitality sector via the Winter Economy Plan
As part of the Winter Economy Plan, the temporary 15% VAT cut for the tourism and hospitality sector will be extended to 31 March 2021. Additionally, those who deferred their VAT bills will be given the option to make 11 interest-free payments during the 2021 – 2022 financial year rather than one lump sum payment.
Loans provided by way of Bounce Back Loan and Coronavirus Business Interruption Loan Scheme will see further flexibility to repay, including extending the length of the loan term from six to ten years. The Government will also be extending applications for the government’s coronavirus loan schemes until the end of November.
Should you require any advice regarding the Winter Economy Plan or the Job Support Scheme, please do not hesitate to contact a member of our team.