The Job Support Scheme

On 24th September 2020, the Chancellor of the Exchequer unveiled the latest range of measures to support businesses, employees and the self employed through the winter period. The measures include the extension of the Self Employed Income Support Scheme, more flexibility for those who have entered into the Bounce Back Loan Scheme, further VAT deferrals and relief as well as the Job Support Scheme (“The Scheme”) which will begin on 1st November 2020. This briefing note provides an overview over the Job Support Scheme based on the information now released by HM Treasury.

The Job Support Scheme – who can apply?

The first point of note is that the Scheme will be restricted to Small to Medium sizes Enterprises (“SME’s”) , as opposed to the Furlough Scheme which was open to all employers. Large businesses will have to prove that their business has been adversely affected if they would like to enrol on the Scheme. In the Policy Paper released this afternoon, it is clear that the Government expects that if a large business was successful in their application, they would not be making capital distributions i.e. dividends whilst using the scheme. The Scheme is available to all SME’s, even those who did not use the Furlough Scheme and it cannot be used for employees who are already on notice of redundancy.

How the Scheme works

The Scheme is an attempt to support employees who are working less hours than usual as a result of a downturn in demand. In short, employees will be paid as usual for the hours that they do work with the remainder being subsidised by the Government and the employer. To be eligible, employees are required to work a minimum of 33% of their usual hours. This is paid by their employer in the normal way. The remaining portion of their salary is split in the following proportions:

• One third paid by employer;
• One third paid by the Government;
• One third sacrificed by the employee.

In total therefore, the employer will pay 52% of the employee’s salary under the scheme, with the Government’s contribution of 22% being capped at £697.92 per month. As a result, the employee receives at least 77% of their total monthly salary, where the Government’s contribution has not been capped. The Government’s contribution will be reimbursed using the same method as the Furlough Scheme.

This scheme will remain in force for a period of six months from 1 November 2020.

Further guidance will be issued as soon as we have further information on the operation of the scheme.

Please remember that we at Wright, Johnston & Mackenzie LLP are here to help, so please don’t hesitate to get in touch if there is anything you think we can help with.

For any advice in relation to any particular aspects of the above, please contact a member of the Wright, Johnston & Mackenzie Employment Team: Andrew Wilson (ajpw@wjm.co.uk), Martin Stephen (mss@wjm.co.uk), Liam Entwistle (lae@wjm.co.uk) and John Grant (jzg@wjm.co.uk).