Employment & Regulatory Law Update – Move over furlough leave, make way for the Job Support Scheme

It has been clear for some time that the furlough scheme would come to an end on 31st October. The Chancellor has been under increasing pressure to put something in its place and yesterday the Job Support Scheme was announced. This is about supporting jobs where there is some work available and it is believed that in time the work will increase. If a role is genuinely redundant the scheme encourages this fact to be recognised so that employees are not kept on when there is no prospect of a return and are encouraged to look for work elsewhere, perhaps in a different sector.

The detail is yet to be published, but the following headlines are known: –

• An employee must work at least one-third of his or her normal working hours. There is no problem with the employee working longer hours than that. The employer must pay for hours actually worked in full. For the hours not worked, the Government will pay one-third, the employer will pay one-third and the employee will give up one-third of his or her wage.

• The scheme will run from 1st November 2020 for 6 months. During months 4 to 6 the Government may change the parameters.

• It appears that the scheme will apply to all employers with no more than 250 employees. For those with more employees, it will be more complicated. This will depend upon evidence that the business has been adversely impacted by the epidemic and there will be requirements that the company is not distributing capital for example through dividends which may indicate that the business’ financial position is not as bad as it may be suggesting.

• Whilst those on furlough leave may be transferred to the scheme, there is no requirement that an employee should have been previously furloughed for the scheme to be applied to him or her.

• It would be possible for employees to come on and off the scheme, but each arrangement must be for a minimum period of 7 days.

• To qualify for the scheme an employee must have been on the payroll on or before 23rd September. The payroll start date did cause something of a problem when furlough leave commenced, however this time the date is less likely to be an issue as those employers hiring employees are doing so in the light of current conditions and are more likely to be able to assess business need.

• The maximum contribution from the Government will be £697.92 per month per employee. At present, it doesn’t appear that the employer contribution will be capped for hours not worked.

• The Government contribution will cover wages only. It will not cover Class 1 Employer NICs or pension contributions and these will remain payable by the employer.

• As indicated, this scheme cannot be used in parallel with redundancy for the same employee. An employee who is the subject of the scheme cannot be made redundant or put on notice of redundancy during any period within which a claim is being made for that employee under the scheme.

• Employers cannot unilaterally impose the scheme upon employees, although employees may take the view that this scheme is a better option than whatever else may be available. The arrangements need to be agreed between employer and employee and confirmation of this provided to the employee in writing. The HMRC will be able to call for evidence of such written agreements.

• Payments will be claimable in arrears i.e. after the employer has made the payment. The first payments will be made by HMRC in December.

More detail will follow. However, the information published should be enough to enable employers to start thinking about how they can use it. For areas where there is no work at present, this will not be a solution, but for other areas where there is work, but not a full workload, it could prove attractive and it must be a positive to see the emphasis upon the finding of work for employees rather than the requirement under the furlough scheme that employees can’t work and which in some cases has discouraged the provision of work which may otherwise have been awarded.

Nigel Tillott – Head of Employment 

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