Chancellor Sunak’s Job Support Scheme raises as many questions as answers
By Tracey Marsden, partner, CMS
Chancellor Rishi Sunak’s announcement last week of a six month Job Support Scheme (JSS) will be a relief to many employers and employees seriously worried about their future following the Government’s announcement earlier this week of tighter restrictions on our social freedom and the impact this will have on many employers’ ability to maintain their current workforce given the imminent cessation of the much praised – but prohibitively expensive – Coronavirus Job Retention Scheme (Furlough Scheme) on 31 October.
The JSS will commence on 1 November, with the targeted aim of supporting ‘viable’ jobs in those businesses most in need of support, rather than jobs that simply continue to exist because of the Furlough Scheme. The JSS is predominantly aimed at supporting SMEs which are automatically eligible, as well as larger organisations that meet a financial assessment test based on the impact of the crisis on their turnover.
To qualify for a grant under the JSS, the employer must provide work and pay for 1/3rd of the employee’s normal hours, with the employer and government sharing equally the cost of 2/3rds of the employee’s remaining pay. Whilst this gives employees the potential to earn 77% of their normal pay, there is a sting in the tail – the Government’s contribution is capped at £697.92 per month per employee.
While the extension of government help to support jobs is to be welcomed and should go some way towards limiting the inevitable spike in unemployment when the Furlough Scheme ends, the Chancellor’s announcement and the Government factsheet that swiftly followed, raises many, as yet, unanswered questions.
- The JSS is targeted mainly at supporting jobs in SMEs. But what, exactly, constitutes an SME for this purpose? Will it be determined by reference to the Companies Act definition of an SME (two of the following criteria being met – turnover less than £25m, less than 250 employees, and gross assets worth less than £12.5m), or by the threshold that applied in the case of, for example, the Coronavirus Business Interruption Loan (annual turnover of up to £45m)?.
- Where the JSS is able to help larger companies, they must demonstrate that their turnover now is lower than before experiencing difficulties from Covid-19. How will that be measured, quantified and evidenced?
- Will both employees and workers qualify for support under JSS? How will it work for those on zero hours or casual contracted?
- Will employers have to provide evidence to demonstrate they can only provide short-time work for an employee in order to access the JSS?
- How will normal pay be calculated for the purposes of the JSS and will future pay increases be taken into account?
How will an employee’s normal hours be determined? Will it be the same methodology used under the Furlough Scheme with the same complexities..
- As with the Furlough Scheme, we expect that at least statutory holiday entitlement will continue to accrue on the basis of full-time hours whilst an employee is short-time working under the JSS. But, what about other benefits? For any contractual benefits, we expect this will need to be the subject of consultation and negotiation between the employer and employee.
Will employees be able to take secondary employment to bridge the gap between their normal and part-time working hours as they could under the Furlough Scheme?
- How will the JSS work in the context of those who are self-isolating, shielding, or on other leaves of absence, such as family leave or sickness absence with enhanced pay?
- Will employees be able to extend any fixed term contracts during the period of JSS, as they have been able to during the Furlough Scheme?
- Covid-19 has caused many companies to go into Administration already. Administrators were not completely precluded from claiming under the Furlough Scheme. Will Administrators be able to access JSS support for the companies under their control? Will they be able to meet the “viable jobs” test?
There is a lot to commend the Chancellor on for the introduction of this new support package, and both employers and employees will be thankful for the continued support, albeit potentially at a lower level than before. However, for those businesses that have been the subject of setbacks due to recent restrictions or have never been able to reopen their doors since March (such as bars/restaurants, nightclubs and theatres) this may offer not comfort at all.
During extraordinary times like this, it is perhaps inevitable that important programmes are developed quickly and without the finer detail required and usually made available during normal times. However, we are promised further detail, which it is hoped will answer these important questions, and many more.