Is your business prepared for the Job Support Scheme from 1st November?
As fast as I write these updates, the Chancellor keeps changing the rules! This afternoon, he has issued separate rules for the Job Support Scheme for the regions who have gone into Tier 2. If you are in a Tier 2 region then please do speak to me about the updated changes.
From the 1st November 2020, the government will replace the COVID-19 Job Retention Scheme with the Job Support Scheme which is currently set to run for 6 months.
While the new scheme is technically a replacement for the previous one that was launched, it’s important to note that these schemes are completely separate and as such have different requirements for your business.
Avoid legal action from your employees over reduced hours
Ultimately the Job Support Schemes means that businesses who are facing lower demand during the winter months can retain their staff on a part-time basis with financial support from the government to provide the employees with a figure closer to their full-time pay.
However, similarly to the original Job Retention Scheme, since this involves a reduction in hours and pay from the employee’s contracted amount you will need to gain your employees consent in writing in order to make this change. Very few employment contracts include clauses around reduced hours on the employer’s side, so this situation could technically be classed as a breach of contract – by having this consent from your employee in writing, you avoid potential legal action in the future.
How much do employers have to pay under the Job Support Scheme?
Throughout the COVID-19 Job Retention Scheme, the most an employer has had to contribute to a furloughed employee’s wages has been 20% with the UK government providing 60% equalling a minimum of 80% of the employee’s regular wages.
Under the new Job Support Scheme, employees are entitled to 73% of their regular wages however employers are now required to pay a higher share of this.
To be eligible for the scheme, employees must work a minimum of 20% of their regular hours – as an employer, you are required to pay them the agreed amount for this time worked.
Under the new scheme, the government will now pay 61.67% of the hours not worked by the employee – equivalent to 49% of their regular wages. The employer is also required to pay 5% of the hours not worked by the employee – i.e. another 4%. In total, under the new Job Support Scheme, employers are required to pay 24% of an employees regular wages compared to the 20% they were responsible for under the Job Retention Scheme in October.
Note: if your business is forced to close to restrictions related to the new tier system, you will not have to pay anything to your employees and the government will cover 66% of their regular wages.
What if, even with the scheme, you still can’t afford to pay your staff?
With employers being responsible for a significantly higher proportion of their staff’s wages, there are likely to be some financial struggles for some businesses. The 2 main options for most employers are lay-offs or redundancies.
Temporary lay-offs consist of an employer suspending an employee for a fixed period of time but acknowledging that the employee will still have a role at the company at the end of that period.
While this takes away the worry of job security for the employee the most the employee can earn while laid-off is £150 in a 3-month period – which isn’t enough for most people to live on and could leave them feeling disgruntled. Again this is why it’s imperative that unless the employment contract already states that you can reduce hours or lay-off staff, you must get written consent from your employees in each individual case.
£150 over 3 months isn’t a large sum for most businesses to worry about when it comes to lay-offs however long term lay-offs can qualify for automatic redundancy which can be significantly more costly – being laid off for 4 consecutive weeks or for a total of 6 weeks during a 3 month period entitles an employee to redundancy pay.
Statutory redundancy pay varies depending on the candidate’s age, weekly pay and length of employment however if you’re struggling to the pay the 55% wages required by the Job Support Scheme it’s unlikely that you’ll want to hand over a large sum of money to receive no work in return.
In the unfortunate event that you find yourself in these circumstances you should try to reach a new agreement with your employees – again, in writing – that outlines how you can keep them employed and how that will impact their working hours or pay.
Managing the staff coming back to work
Although returning to work has been an option for those on the Job Retention Scheme, it isn’t until the Job Support Scheme that all employees using it are required to work at least part-time to be eligible.
This could result in staff members who haven’t been working since the start of the COVID-19, who are now being expected to perform as before in a work environment, not coping or even wanting to show up.
Bringing employees back from furlough can be a tricky task to get right so remember to communicate on a regular basis to find out exactly what support they need.
Physical safety is also vital at a time like this so ensure that you have precautions in place to protect your employees from COVID-19 – this will also prevent any employees trying to avoid work without breaching contract by claiming the workplace isn’t safe.
On top of everything else that your business is likely dealing with right now, these might seem like unnecessary elements to consider – but wouldn’t it be a shame to face legal action and hefty payments just when you’ve managed to get your business through to the other side?
For any further advice or support in this area, feel free to get in touch.