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The Coronavirus Job Retention Scheme (the Furlough Scheme) is due to end on at the end of April 2021, just four short months from now. But what will come next? As the Covid-19 pandemic continues, the Government will be under pressure to provide further support for businesses and employees to stem the threat of mass redundancy.
Before the Furlough Scheme was extended at the beginning of November 2020, the original plan was to introduce a new scheme called the Job Support Scheme (JSS). The JSS was planned to come into effect from December 2020, but has been postponed for now.
At the end of the Furlough Scheme, there are currently three potential options:
Option 3 seems unlikely at the moment given how much disruption is still being caused to businesses across the country.
It may be the case that, with the introduction of effective Covid-19 vaccines, the Government will be ready to start encouraging a return to normal life by April 2021. If so, the JSS may finally come into effect to provide a more ‘tailored’ approach to supporting businesses struggling with coronavirus restrictions and reduced consumer demand.
So, how might the Coronavirus Job Support Scheme work?
The Job Support Scheme (JSS) was announced by Chancellor, Rishi Sunak, on 24 September 2020 to help businesses keep on their employees and hopefully avoid mass redundancies over winter. The Scheme was originally scheduled to run from 1 November for an initial period of six months, however, was postponed when the Furlough Scheme was extended. The following information is based on the JSS guidance as of October 2020, before the extension of the Furlough Scheme was announced.
There are two versions of the Scheme:
While the Furlough Scheme can be used by any business requiring additional support due to the impact of Covid-19, the Job Support Scheme is targeted at businesses only in specific circumstances – namely, businesses that are facing lower consumer demand due to Covid-19 or that have been forced to close because of local lockdown restrictions.
Here’s how the Scheme could work if introduced after April 2021. For comparison, we have also set out how the Furlough Scheme works:
Under the existing Furlough Scheme, the employer can place an employee on leave while claiming up to 80% of their salary from the Government for hours not worked up to a maximum of £2,500. The employer can choose to top up the employee’s salary to 100% but they do not have to.
Employees are allowed to be flexibly furloughed and brought back to work as needed. For example, an employee could work part-time, receiving their pay as normal for hours worked and receiving 80% of their salary for hours not worked.
Employers are required to cover National Insurance and employer pension contributions as normal, including for hours not worked.
All employers with a UK bank account and PAYE scheme are eligible for the Furlough Scheme and can use the Scheme even if they did not use it prior to the extension.
Employees can be on any type of employment contract to be eligible for furlough and are not allowed to do any type of work (paid or voluntary) for their employer while on furlough leave.
This current form of the Furlough Scheme will run until 30 April 2021.
Under JSS Open, businesses which are allowed to open but face reduced demand due to Covid-19 would be able to claim support to help keep their employees on and avoid having to make redundancies.
The rules as of October 2020 were:
Under JSS Closed, where a business has been forced to close due to coronavirus restrictions introduced by any of the four UK governments, they would be able to claim two thirds of their employee’s lost wages up to a maximum of £2,083.33 per month.
Employees could also be eligible for other support, such as Universal Credit, which they would have to apply for themselves.
For both JSS Open and JSS Closed, the employer would be required to continue paying National Insurance and minimum pension contributions and could choose to top up their employee’s salary. Both the employer and employee would have to agree to the new arrangement and put the agreement in writing – essentially amounting to a change of employment contract.
Like the current Furlough Scheme, JSS payments would be made in arrears, reimbursing the employer for the Government’s contribution.
Any employer with a UK bank account and PAYE scheme would be eligible for the grant. They will not need to have previously used the Furlough Scheme.
Large employers (with over 250 employees) would be required to meet a financial impact test to show that their turnover has been affected by Covid-19. SMEs and charities would not have to pass a financial impact test.
Any type of employee will likely be eligible (so long as they have been an employee for a sufficient length of time) including:
The employer will have flexibility to put the employee on the Scheme, change their hours, or take them off, however, each arrangement will need to last at least seven days.
The business would need to stop claiming under the Job Support Scheme before the employee could be made redundant or put on notice.
HMRC would likely carry out checks and could withhold payments if incorrect information is provided. If a claim was found to be fraudulent or incorrect after payment has been made, HMRC would likely be able to claw back the money or even take criminal legal action.
At Glanvilles, our team of specialist employment law solicitors help businesses put in place the policies and procedures they need to promote their commercial interests and protect their employees. We regularly advise businesses which do not have their own HR team, applying our legal expertise and business acumen to produce positive outcomes and minimise the risk of disputes arising.
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice, and should not be relied upon as advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. All content was correct at the time of publishing. Legal advice should always be sought in relation to specific circumstances.