Government Job Support Scheme: JSS

Government Job Support Scheme

28 October 2020

Government Job Support Scheme

British Summer time is now behind us. November beckons and with it we’re looking at cold fronts.  Meanwhile on the employment front we’re looking at the end of The Job Retention Scheme and furlough agreements etc.  And this last week of October should witness the transition from one type of agreement with employees for whom there’s not enough work, to another agreement under the government Job Support Scheme (JSS).

Government Job Support Scheme- JSS

It’s hoped that the new scheme will mitigate the anticipated rush to restructure and reduce headcount because demand and workload hasn’t returned to pre-Coronavirus levels.

When it was first announced on 24th September, the aim of the Job Support Scheme was to support viable jobs. The view was that it was much less generous than the job retention scheme. But last week’s announcement by the Chancellor has created a new financial mix. It’s one that has the potential to cost employers more. With its minimum working hours requirement, the support offers employees at least 73% of their full salary. But regarding take-home pay, it becomes comparable to its predecessor.

Will it be enough?

Whether it will be enough to offset the anticipated wave of redundancies is an open question.  Employers must weigh the extra cost of topping up staff wages staff on reduced hours against that of making redundancies only to have to rehire and retrain in the future. There may also be reputational damage to consider. Though this may be less of a concern in a Covid-19 driven economic climate.

There is one factor that there’s no overlooking within the cocktail of issues facing employers, in particular in small-medium size businesses. And that’s agreeing the use of the JSS scheme with the affected employees. This was easier to recognise with the job retention scheme as furlough agreements became the norm. But use of the new scheme will have to be agreed in similar fashion.

Two types of JSS in the government job support scheme

There are actually two types of JSS:

  1. JSS Open and
  2. JSS Closed.

The latter is for businesses that have closed or will have to close under lockdown restrictions.

JSS Open will be the more prevalent and this involves the following parameters:

  1. Employees will work a minimum of 20% of their normal contracted hours and they’ll receive their normal pay for doing so.
  2. Employees will receive 66.67% of any “unworked” hours from their normal contracted hours. 
    • The split will be as follows: 5% paid by the employer and 61.67% paid by the government (NB. The employer will pay the full 66.67% to the employee and can claim the 61.67% from the government.
    • The unworked hours contribution will have a cap of £1541.75 per month
  1. Employees will agree to forego the balance of their normal salary
  2. The Employer will pay National Insurance & Pension Contributions on the unworked hours.

Giving flexibility

There’s an argument that the scheme provides businesses with valuable flexibility, allowing them to change working patterns week by week to meet demand. Whilst there is a cost to employers regarding the minimum hours plus 5% of the “unworked” hours, they were already paying 20% of salary by the end of the Job Retention Scheme. And that with the chance of there being no hours worked.  On this basis the scheme may prove attractive to many employers.

There is of course nothing to stop businesses from putting workers on reduced hours without using the scheme. Indeed many employment contracts already have this facility. The key difference with the JSS is that it protects some of the employee’s wages that they would have otherwise lost.

While employees stand to benefit from the government topping up their wages, the need for businesses to also contribute, which they wouldn’t have to if they chose not to use the scheme, may make it less attractive. Yet, retaining reduced hours arrangements or short-term layoffs isn’t sustainable for long periods. Further, as the scheme is in place until April 2021, most employers will use it as an alternative to redundancy.

More cynical observers have pointed to the incentive of the Job Retention Bonus (£1,000 for each furloughed employee still in employment on 1st February 2021) causing employers to defer any redundancy decision until they qualify for the bonus. But the need for retained employees to earn at least £520 per month gross in November, December & January makes this less attractive.

From a more positive perspective, employers may use the scheme to keep experienced and skilled staff. Staff who’ll then be ready to carry on working when business picks up once economic activity gets moving once more.

At the end of the day

In the end, employers may have no alternative than to downsize and reduce headcount. Yet, with the support of the government job support scheme over the next six months, many businesses may explore various combinations through the flexibility offered by the scheme rather than make people redundant and face the cost of rehiring and retraining when the need arises.   

It’s not an easy decision with many factors to consider. And whether you’re assessing the right combination for you to use the scheme or simply want to ensure you use the correct agreement Go Legal HR can help.

There are three ways to get in touch with Go-Legal:

  1. Send a message via our web form here. 
  2. Drop a note to: [email protected]
  3. Call on 07801 709945 

 

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