HM Treasury has today announced that the Government contribution to employers’ wage costs under the Job Support Scheme (JSS) will be increased.
The Job Support Scheme, which opens on 1st November 2020, and covers all nations of the UK, is intended to run for six months. When originally announced, it was stated that employers would be required to pay a third of their employees’ wages for hours not worked, providing the employee had worked a minimum of 33% of their normal hours. Today’s announcement reduces that employer contribution to 5% of the unworked hours and reduces the minimum working hours requirement to 20%.
The schemes provide the following support:
- Open businesses that are experiencing considerable difficulty will be given extra help to retain staff – the government has increased its contribution to wage costs and reduced the employer contribution to 5%
- Business grants are also being expanded to cover businesses in particularly affected sectors in high-alert level areas
- Grants for the self-employed have been doubled to 40% of previous earnings
We have explained each of the schemes and the key changes below.
Job Support Scheme (JSS) – for open businesses
The announcement should go some way to lighten the burden of retaining staff. For every hour worked, the scheme provides that the employee be paid for up to two-thirds of their usual salary. When it was originally announced, the JSS required employees to work a minimum of 33% of their normal working hours and saw employers paying a third of their employees’ wages for the hours that had not been worked.
Today’s update reduces the minimum hours requirement to 20% and the employer contribution to 5%, with the government funding up to 61.67% of wages for hours not worked, up to £1541.75 per month (more then doubling the maximum payment under the previous rules). This means that if someone was being paid £1100 per month, they will take home at least £807 per month, with the employer paying just £283 of that per month and the government paying the remaining £524.
Employers will continue to receive the £1000 Job Retention Bonus, providing employees remain employed as of 1st February 2021.
The Job Support Scheme for businesses legally required to close remains unchanged.
The announcement increases the amount of profits covered by the grants from 20% to 40%, increasing the maximum grant from £1875 to £3750.
- The government will provide two taxable SEISS grants to support those experiencing reduced demand due to COVID-19 but are continuing to trade, or temporarily cannot trade.
- It will be available to anyone who was previously eligible for the SEISS grant one and grant two, and meets the eligibility criteria.
- Grants will be paid in two lump sum instalments each covering 3 months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021. The government will pay a taxable grant which is calculated based on 40% of three months’ average trading profits, paid out in a single instalment and capped at £3,750.
- The second grant will cover a three-month period from the start of February until the end of April 2021. The government will review the level of the second grant and set this in due course.
It has also been announced that there is approved additional funding to support cash grants of up to £2100 per month for businesses in the hospitality, accommodation and leisure sectors in high-alert level areas who may be adversely affected by the restriction. This includes support for businesses that are not legally required to close but have been impacted by local restrictions.
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