How will businesses and the government split workers’ wages as part of the job support scheme?
Chancellor Rishi Sunak this week announced a new support package to protect jobs and businesses during the coronavirus pandemic.
At the heart of the multibillion-pound support package, set out on Thursday, is a new Jobs Support Scheme (JSS).
The JSS is a form of wage subsidy for “viable” jobs which aims to keep people in the workforce, even if they cannot work their usual hours.
It will replace the existing Government-backed furlough scheme, which will be wound down on October 31, and offers a fresh financial lifeline to workers and businesses as they prepare for a tough winter ahead.
So, here’s what you need to know about the scheme:
When will the scheme be introduced and how long will it last?
The JSS will launch on November 1 and run for six months.
Who is it for?
The scheme is aimed at protecting viable jobs in businesses which are currently facing lower demand than normal. The aim is to keep people in the workforce, even if they cannot work their usual hours.
How will the scheme work?
The state will contribute towards the wages of employees who are working fewer hours than normal.
Employers will continue to pay staff wages for the hours they work. But for the hours not worked, the Government and the employer will each pay one third of their equivalent salary.
It means that employees who can only work on shorter hours will still be paid two-thirds of the hours for the time they cannot work.
Employees must be working at least 33 per cent of their usual hours and will receive at least 77 per cent of their normal pay – slightly less than the 80 per cent they earlier received under the furlough scheme.
After three months, the Government will consider whether to increase the minimum hours threshold.
The Government contribution will be capped at £697.92 per month.
Employers will be reimbursed in arrears for the Government contribution.
Who qualifies to take part?
Employees must be on an employer’s PAYE payroll on or before September 23 2020.
The Government has emphasised the scheme will only support jobs which are viable. The employee must not be on a redundancy notice.
Employees can cycle on and off the scheme and do not have to work the same pattern each month.
Businesses across the UK can potentially take part, even if they have not previously used the furlough scheme.
All small and medium-sized enterprises (SMEs) will be eligible. Large businesses will need to demonstrate they have been adversely affected by Covid-19.
The Government expects that large employers will not be making capital distributions such as dividends while using the scheme.
How much will the scheme cost?
It will depend on take-up, but could potentially cost about £300 million a month for each million employees who are in the scheme.