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Continuing support for struggling SMEs as the second COVID wave descends

With the flexible furlough scheme due to end on 31 October and no end to the COVID-19 pandemic in sight, we summarise the main points of the Job Support Scheme, operational from 1 November.

Until Spring 2020, few had ever encountered the word ‘Furlough’, let alone knew its meaning or how to pronounce it (‘furloin’ and ‘furlong’ being common mispronunciations in the early days). Now, the word trips off everyone’s tongue but, for many, it may soon slip back into obscurity after the end of this month.

From 1 November, the Coronavirus Job Retention Scheme will be replaced by the Job Support Scheme (JSS). Under the new short-time working scheme (the ‘main’ scheme), the emphasis will be on saving viable jobs by providing subsidised short-working to assist businesses who face falling demand over the winter period. All businesses that employ fewer than 250 employees will qualify whereas larger employers must satisfy a financial test to gain access.

The key difference from what went before is the requirement for employees to work a minimum of one-third of their ‘normal’ contracted hours in a seven-day period for which the employer is liable to pay in full. The cost of the remaining two-thirds is to be borne equally by the Government (up to a maximum of £697.92 per month) and the employee who will simply forgo the rest. Employers can increase the hours worked as required with the Government subsidy being scaled down proportionally. Employers will remain liable for tax/NI liability and pension contributions based on the normal contractual rate of pay. There are many uncertainties relating to the calculation of holiday pay, etc. which await clarification.

The end of Furlough? Not quite….

The main JSS scheme was conceived at a time when infection rates were low and the emphasis was on easing everyone back to work. However, a month is a long time during the COVID-19 pandemic and recent weeks have seen a surge in infections and a consequential rise in hospital admissions. This has already led to the closure of many leisure businesses in Merseyside and more compulsory closures are anticipated across the UK in the coming weeks. This expectation has led to the Government introducing a second ‘Premises closure’ JSS scheme, which is in essence, an extension of the CJRS, open only to those businesses that face a period of compulsory closure for at least seven days. This scheme is open to all employers and provides for payment of two-thirds of employee salaries during any minimum seven-day period of compulsory closure without any required contribution by the employer. The scheme covers delivery and collection-only businesses but notably does not include workplaces closed on public health grounds due to a COVID outbreak there.

It is anticipated that eligible businesses will be able to claim under both schemes as they strive to navigate through successive waves of local lockdowns and ‘circuit breaks’, followed by a temporary easing of restrictions.

This blog was written by:  Mark Higgins

DISCLAIMER: Please note that this post sets out the general position under the general law. It should not be acted upon in any specific circumstances without taking specific legal advice as to those circumstances. Also, it should not be relied upon, acted upon or treated as a substitute for specific advice relevant to particular circumstances. If you do require specific advice please contact us for assistance.