Chancellor announces new job support scheme

On Thursday 24 September 2020, Chancellor of the Exchequer Rishi Sunak announced the new Jobs Support Scheme, which will run for six months from the start of November, once the Coronavirus Job Retention Scheme comes to an end.

Whilst further details are awaited, the Chancellor said that the Jobs Retention Scheme:

• will apply to small and medium-sized businesses, and also to larger businesses whose turnover has reduced as a result of the pandemic; and
• will apply to employees who work at least one-third of their normal working hours, and are paid at their normal rate of pay for those hours.

We understand that, under the new Scheme the Government will pay one third, and the employer will pay one third, of the pay which affected employees have lost as a result of reducing their hours, meaning that the employee will receive at least 77% of their normal pay.

We base this view on the following tweet by HM Treasury:

The Chancellor added that employers will not be able to make employees on the Scheme redundant. It’s not clear what restrictions this will place on use of the scheme, so we await further detail.

As with the Coronavirus Job Retention Scheme, the devil will be in the detail. Employers will be keen to know more about a variety of issues, including:

• whether they will be eligible for the Scheme;
• how “normal working hours” and “normal rate of pay” will be calculated;
• how the Scheme will work in relation to employees who work more than one-third of their normal working hours;
• whether employees will need to agree to the change to their working hours; and
• how the Scheme will impact on holiday pay, bonuses, sick pay, notice pay, redundancy payments, pension contributions and National Insurance contributions.

The Chancellor said that further information about the Scheme will be published shortly, and that the details will be worked through with employer organisations and Trade Unions.

Whilst any funding to help preserve jobs is welcome, businesses will hope that clear and detailed rules are published as soon as possible, to help with business planning, and that, unlike with the Coronavirus Job Retention Scheme, those rules are not subject to repeated and confusing repeated amendments.

ARAG works in partnership with Ashfords‘ solicitors, the content of this article was written by Ashfords‘ Employment Team.