Yesterday (22nd October 2020), Chancellor Rishi Sunak announced new changes to the Job Support Scheme (JSS) which would see increased financial support for businesses.
Despite the JSS being implemented in just over a week’s time, Chancellor Rishi Sunak has announced further changes to the scheme which aims at providing increased support for workers.
These changes allow employers to pay less whilst staff also work fewer hours before they qualify for the support provided by the JSS.
In his initial statement, the Chancellor announced that the JSS would mean staff would have to work at least one-third of their normal hours. In return, their employer would pay 55 per cent of their wages for the hours not worked whilst 22 per cent would be paid by the Government.
However, this is now changing so that employees only have to work one-fifth (20 per cent) of their usual hours. The Government will now pay 62 per cent of the wages for the hours not worked. Conversely, this means that employers will only have to pay a minimum of 20 per cent for the usual hours and 5 per cent for the unworked hours. This scheme will be for eligible businesses in all tier levels.
Speaking in the Commons, the Chancellor stated that these changes were made for “businesses who can stay open”. Notably, these changes are most likely to impact Tier 2 areas, some of whom previously argued that being under Tier 3 restrictions would be better as they would be entitled for greater financial support from the Government.
Monthly grants of up to £2100 will also be available to English councils which will fund 150,000 hotels, restaurants and B&Bs. The financial support of the self-employment scheme has also been doubled to now covering 40 per cent of monthly trading profits with a limit of £3750 in total.
Reacting to this news, Neil Carberry, Chief Executive of the Recruitment and Employment Confederation (REC), said:
The Chancellor’s changes to the Jobs Support Scheme will see more firms use it as a realistic way to ride out the Covid recession. Local grant support in higher tier areas is welcome – and emphasises the need for all firms to talk to their local authority about the support available. But we are disappointed by the failure to address problems caused to the suppliers to hospitality and leisure businesses by the same fall in demand. Staffing firms in hospitality will be crucial to the sector’s recovery and need support too.
More can be done to protect jobs. Lowering the cost of labour by reducing employers National Insurance contributions will help boost hiring and keep people in work. Delivering on effective test, track and trace system is absolutely essential to helping our economy recover – and businesses are looking to Government to deliver on this.
Musab Hemsi, Partner at LexLeyton, an employment law company, said:
The Chancellor’s announcement today will undoubtedly ease the financial pressure facing UK businesses, with two of the three changes directly supporting employers.
However, a far greater concern for businesses is a woeful lack of clarity and guidance around how the Job Support Scheme will operate with just one week until it goes live. This chaotic approach is leaving employers in the dark and having a damaging effect on employee relations, with businesses unable to properly communicate to their staff about how they will manage their teams through the next phase of the crisis. Alongside the new support announced today, the government must urgently publish flexible and clear guidance on the Job Support Scheme to give much-needed certainty to businesses at this crucial time.
Nigel Morris, Employment Tax Director at MHA MacIntyre Hudson, an accountancy firm, said:
Today’s announcement of additional support for businesses crippled by Tier 2 lockdowns shows the genuine desire of the government to aid businesses.
However, a persistent issue dogging all these measures is the need to continually change and update them. Businesses had just got their heads round the new JSS scheme and now further layers of complexity have been created. We could be heading towards a situation where we see dozens more revisions over the next six months. The result will be a backlog of errors and over-claiming that embroils companies who don’t adapt to rule changes fast enough.
A second problem is that large firms affected by Tier 2 lockdowns will still need to show they’ve seen decreasing turnover to access the latest JSS support. This will disadvantage large firms who have had a decent recovery over the Summer, but are now in Tier 2 lockdowns and running into difficulties as Winter sets in.