Following the announcement by the Government of the new job support scheme (JSS) it has given employers another option to consider with the goal of encouraging employers to retain jobs. You will no doubt have seen some of the details of the new scheme however some key points to note:
- Government contributions are capped at £697.92 per month.
- Starting the redundancy process or making someone redundant would preclude you entering that employee into the scheme.
- You will have to calculate and pay wages based on the employee’s normal salary not their furloughed salary.
- You will claim the government’s contribution (22% of non-worked hours) back monthly in arrears.
- Employees must be working a minimum of 33% of their contracted hours.
- You will have to get your employees to agree in writing that they are willing to be a part of the JSS should you go down this route.
The scheme will run until April 2021, giving us an indication of how long the Government believes COVID will continue to impact on business, jobs and the economy.
What are the pros and cons?
We need to wait for further details to be announced however here are our initial thoughts:
The benefit to retaining more staff on reduced hours could be that should the company start to trade more securely in the future they will save time and money otherwise spent on recruiting new staff. Furthermore if you have been utilising the furlough scheme thus far, you’ll get £1k per head for everyone who remains on your books come January 2021.
That said, I expect a lot of employers will be hesitant to persevere with this scheme, rather than just let staff go. It requires a significantly higher contribution from the employer than the furlough scheme has, at a time when many businesses are already struggling. There will be many businesses who will be unable to or struggle to pay 55% salary for 33% resource ‘use’. I think it will take quite a specific set of circumstances for a business to be positioned to benefit from this, i.e. they have to have some level of trade, but not the full amount, have sufficient cash flow to pay the portion of the wages they are responsible for and the governments before claiming back in arrears.
What advice would we give at present?
We need to await further detail on the scheme and its practicalities. If you are a business mid-consultation on redundancies, then I wouldn’t suggest you fully fall back from that just yet. Better to communicate a pause and hold employee’s in their ‘at risk’ status, whilst determining as promptly as possible, whether or not this scheme can help reduce (or remove) the requirement to make redundancies at this time. Make it clear when pausing that the redundancy process may need to restart in the near future.
If you would like any advice or support in determining whether the JSS will benefit your business and how to implement it please get in touch by emailing firstname.lastname@example.org or call us on 0131 225 7458.