Changes to the Job Support Scheme Explained

At the end of September, we explained the upcoming changes to the Government’s Coronavirus Job Retention Scheme, which comes to an end on October 31st. Since then, the introduction of further restrictions to deal with the spread of Coronavirus has put businesses under additional pressure, with many forced to close completely or operate limited hours.

In response, the Chancellor has announced a series of changes to the Job Support Scheme, which was intended to replace the furlough scheme as part of the Government’s Winter Economy Plan.

Changes to the Job Support Scheme

These are the key elements of the revised scheme Job Support Scheme, announced on 22nd October:

• The scheme will top up salaries in firms that cannot take employees back full-time.

• The scheme starts to operate from 1st November and covers all nations of the UK.

• For every hour not worked, the employee will be paid up to two-thirds of their usual salary.

• The government will provide up to 61.67 percent of wages for hours not worked, up to £1541.75 per month. This more than doubles the maximum payment of £697.92 under the previous rules.

• The employer contribution to unworked hours will be reduced to just 5 percent.

• The minimum hours requirements will be reduced from 33 percent to 20 percent, so employees working just one day a week will be eligible.

• Employees must have been on the firm's payroll since at least 23 September. They can be moved on and off the scheme, or work different hours. Each working arrangement must cover at least seven days.

• Employers have to pay National Insurance and minimum pension contributions.

• Employees cannot be made redundant or put on notice while an employer claims a Jobs Support Scheme grant on their behalf.

• Employers using the scheme will also be able to claim the Job Retention Bonus for each employee that meets the eligibility criteria of the JRB. This is worth £1,000 per employee.

• Taking the Job Support Scheme and the Job Retention Bonus together, an employer could receive over 95 percent of the total wage costs of their employees if they are retained until February.

The scheme is open to small and medium-sized businesses employing around 250 or less. Employees must be in ‘viable jobs’ to benefit from the scheme. Businesses in industries that are currently closed, such as nightclubs, may not be eligible.

Large businesses are also eligible, but only if they can prove their revenue has fallen because of coronavirus.

Related: Paying Wages & Sick Pay for Employees During Covid-19

Support for self-employed increased

A similar support scheme for self-employed people has been revised and will now provide a lump sum grant of 40 percent of estimated earnings, doubled from 20 percent:

• The grant will be available to those eligible for the Self Employment Income Support Scheme Grant.

• The grant will cover three months' worth of profits for the period from November to the end of January.

• It will cover 40 percent of average monthly profits up to a total of £3750.

• A further grant to follow covering February to April will be announced later.

Additional business grants

The Chancellor also announced cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector that are adversely impacted by the restrictions in high-alert level areas.

This applies to businesses in those sectors that aren’t legally required to close but have been adversely affected by local restrictions.

The Government has indicated that these grants will be available retrospectively for areas that have already been subject to restrictions. They are additional to the higher levels of business support provided to Local Authorities moving into Tier 3.

Related: BBLS And CBILS: What You Need To Know

Related: Deferral of VAT Payments for UK Businesses Due to Coronavirus

We can help

If your business is still struggling - or if you could just use some help - we have experienced and knowledgeable accountants who can help.

At Accounts & Legal, we can help you with all aspects of forecasting, tax, corporate finance, and getting back on top of any financial issues caused by COVID-19. We also have a team of experienced solicitors who can help with legal services such as corporate law, employment law, and commercial law.