The Winter Economy Plan



24 September 2020

Earlier this week we commented on the new national restrictions set out by the Prime Minister in response to the growing second wave of the coronavirus pandemic.  And having announced these new restrictions, which are likely to apply for at least six months, it was not unexpected that the Chancellor of the Exchequer, Rishi Sunak, would need to follow suit and lay out the government’s economic plans during the continuing crisis.

Of particular concern to the followers of these posts will be what action would be taken around the Job Retention Scheme (JRS).  The JRS is due to end on the 31st October 2020, and is currently supporting millions of employee jobs across the United Kingdom.

A replacement

The Chancellor has consistently stated that he did not intend to extend the JRS beyond the end of next month, and indeed that has proven to be the case.  Sunak said;

“it is fundamentally wrong to hold people in jobs that only exist inside the furlough”

And it is indeed true that many people currently benefiting from the JRS may have no job to return to when the scheme ends.  But that certainly doesn’t apply to every claimant, and the Chancellor continued;

“Many businesses are operating safely and viably, but they now face uncertainty and reduced demand over the winter months.  What those businesses need is support to bring people back to work and protect as many viable jobs as we can.  To do that, I am announcing today the new Job Support Scheme.”

The Job Support Scheme (JSS)

The JSS is set to begin on the 1st November 2020, the day after the Job Retention Scheme ends.  And, as the name suggests, this scheme is only about supporting those who remain in work, albeit at reduced hours during the current crisis conditions.

Although full details are not yet available, the initial government documents appear to suggest the following parameters for the scheme:

- To qualify, employees must work at least a third of the usual hours

- The employer will pay for any hours worked in the usual way

- For hours not worked:

  • The employer will pay one third of the employees's usual pay
  • The JSS scheme will pay one third of the employee's usual pay (to a maximum of £697.92 per month) – although the employer will only be reimbursed by the government in arrears, which may raise some cashflow issues for employers in the current climate

The guidance suggests that, where the government’s contribution is not capped, an employee using the scheme will receive at least 77% of their pay. 

This leaves many questions potentially unanswered, and this factsheet suggests that more detailed guidance will be published soon.  The same document also confirms that the JSS grant will not cover employer National Insurance Contributions or employer pension contributions, although both will remain payable.  So we can probably expect some more guidance on this point from The Pension Regulator shortly too.  

The small print

The minimal information currently available also provides an indication of some parameters around usage of the new JSS:

- The employee must not be on a redundancy notice

- Employers will also be able to claim the Job Retention Bonus (available at the end of January 2021 – please see this earlier post for details)

- The scheme is open to all employers with both a UK bank account and a UK PAYE scheme

- All Small and Medium-Sized Enterprises (SMEs) are eligible, but large businesses will be required to demonstrate that their business has been adversely affected by COVID-19, and not making capital distributions (such as dividends) whilst using the scheme.

So what now?

In addition to the new Job Support Scheme announcements, the Chancellor also made significant new announcements on other areas of corporate and personal financial support, including loan extensions, VAT deferral measures, and enhanced time to pay tax for those under the self-assessment regime.  Fuller details of all those announcements can be found here

When taken together the new measures represent nothing short of a financial lifeline for many businesses that were struggling to see a future beyond the end of next month.  As such this package will be very welcome news for many.

We will of course update this post – and add more context in the areas of Employee Benefits provision and Pension contributions – as more details become known.

For more information on any of the above topics, please speak to your usual Howden Consultant in the first instance, or visit our website for other contact options. For the latest details on COVID-19 & Employee Benefits provision please visit our coronavirus hub.

(First Published 24/09/20/ Updated 25/09/20)

Steve Herbert

Steve is Head of Benefits Strategy, Howden Employee Benefits & Wellbeing, and is an award-winning thought leader on Pensions, Employee Benefits, and Human Resources issues. He is occasionally accused of making Employee Benefits interesting.

Steve Herbert

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