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New Coronavirus Support Scheme For UK Workers

September 29, 2020, Covington Alert

The UK Government has responded to growing pressure to support those who may be worst affected by the ending of the Coronavirus Job Retention Scheme (“CJRS”) on 31 October 2020. In this alert, we outline the rules of the new scheme and highlight key practical considerations for employers. Further Governmental guidance is expected soon.

What Was Announced?

On 24 September, 2020, the U.K.’s Chancellor announced the new Job Support Scheme (“JSS”), which will benefit employers that are able to provide some work to employees from November onwards (a minimum of one third of usual hours). The Government will top up a percentage of the shortfall in working hours, up to a cap of £697.92 per month. The JSS will run for a period of six months.

Who Is Eligible?

The JSS is open to all employers with a UK bank account and a PAYE registration. Small and medium-sized enterprises - to be defined by guidance, but generally those businesses with a turnover of less than £10.2 million - will automatically be eligible. Larger businesses will have to demonstrate that they been adversely affected by COVID-19 before being eligible to participate. The Government “expects that large employers will not be making capital distributions (such as dividends or share buybacks), while using the scheme”.

Businesses will be eligible even if they have not previously used the CJRS, which means that those employees hired since March this year could qualify. Unsurprisingly, participating employees cannot be made redundant or served notice of redundancy during the period of JSS benefit. There is no obligation to retain participating employees beyond that period, however.

Since the new JSS is intended only to support "viable" jobs, eligibility will be conditional upon employees working, and being paid, for a minimum of 33% of their usual hours. For remaining hours, the employer and the Government will each pay one third of the employee’s usual pay (subject to the cap referenced above). In other words, in addition to wage costs for hours worked, employers will be liable for one third of the remaining wage cost during unworked hours (or a total of just over 55% of usual pay). The JSS will not cover Class 1 employer National Insurance Contributions or pension contributions.

Practical Considerations

As a practical matter, employers will need to negotiate new contractual terms with participating employees, assuming relevant contracts do not permit unilateral changes to hours (which would be unusual). Employers will be able to make a claim online through Gov.uk from December 2020. Grants will be payable monthly in arrears, after payment to the employee has been made and that payment has been reported to HM Revenue and Customs (“HMRC”) via an RTI return. HMRC will be checking claims, to limit risk of misuse of the JSS.

Employers await further details.

If you have any questions concerning the material discussed in this client alert, please contact the following members of our Employment practice.

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