Oct 2020
15
Pros and Cons: The New Job Support Scheme
Before diving into the positives and negatives of the new Job Support Scheme I want to recap on what it is.
What is the Job Support Scheme?
The new Job Support Scheme was announced by the government in September, and it'is designed to top up the wages of employees unable to work full-time because of coronavirus restrictions over the winter. Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Businesses will continue to pay their employees for time worked, but the burden of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The scheme was originally set to open on 1 November 2020 and run for 6 months, until April 2021. However, the start of a second England-wide lockdown has prompted the Government to extend the original furlough scheme until December – pushing back the start date for the Job Support Scheme.
Main Pros for the Job Support Scheme
This scheme is designed to protect jobs where businesses are facing lower demand over the winter months due to coronavirus. 9.6 million employees are still on furlough leave across the UK, with the scheme still supporting 1.2 million businesses. This new scheme could help mitigate the impact of the end of Coronavirus Job Retention Scheme ending on 31st October.
Employers can receive up to £697.92 per month wage top up of eligible employees unable to work full-time because of coronavirus restrictions over the winter.
An unexpected silver lining to the scheme is that employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria. This is a one-off payment of £1,000 to employers who have availed of the CJRS for each furloughed employee who remains continuously employed until 31 January 2021.
Main cons of the Job Support Scheme
It’s far less generous than the current Job Retention Scheme - The Government contribution will be capped at £697.92 a month compared to the initial £2,500 plus associated Employers’ National Insurance and pension contribution under the Job Retention Scheme placing a greater responsibility on the employer to fund employment costs. In fact, under the scheme the government never pays more than 22% of the employees' overall salary.
The employer ends up paying more in wages than the hours they get in return - The percentage cost to the employer far outweighs the percentage of productive hours provided by that employee to the business and a stark reality is that it costs more than 50% more to employ several people working 40% of the time compared to fewer people working full time.
Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee. Therefore, employers face the dilemma now of assessing demand for the forthcoming months for their business and making decisions about the number of employees required.
Job Support Scheme payments will be made monthly in arrears commencing in December, reimbursing the employer for the government’s contribution. The grant will not cover employer NICs or pension contributions, but these contributions will remain payable by the employer. This means that the overall cost of employment for employers is higher than simply their contribution to employee salaries.
Sadly, it does not appear that the Job Support Scheme will avoid a rise of redundancies over the coming months as employers seek to manage their cashflows to survive the winter months. Join our latest webinar to find out more about the New Job Support Scheme and whether it’s right for your organisation.
Webinar: New Job Support Scheme Explained
18th November – 10.30am
In this webinar, we look at what you need to know about the new Job Support Scheme, including which employees are eligible, the level of government funding, and how the scheme is actioned through payroll. We will also explore the rise in redundancies and the new changes regarding statutory redundancy and notice pay for furloughed employees.
What you'll learn:
- What the extended CJRS means for your business
- Everything you need to know about the Job Support Scheme
- Tips for safeguarding your payroll
- How BrightPay’s Job Support Scheme Calculator & Claim Report works
- How to calculate notice pay and redundancy pay for furloughed employees
- Top tips to ensure COVID-19 does not slow down payroll processing
Related articles:
BrightPay Covid-19 Resources Hub
Webinar: CJRS Changes & Flexible Furlough - What you need to know
HMRC set to crack down on furlough fraud
