On 9 October, the Chancellor of the Exchequer announced an expansion of the Job Support Scheme, a new measure to support employees’ salaries, which is set to be introduced from 1 November 2020. Under this expansion, the Government will provide additional financial support to businesses that are forced to close their premises temporarily due to national or local Coronavirus restrictions. Here, we explain how the expanded Job Support Scheme will work when it comes into force next month.
What is the Job Support Scheme?
The Job Support Scheme was first announced as part of the Winter Economy Plan, as a measure that will effectively replace the Coronavirus Job Retention Scheme from 1 November 2020. To be eligible, employees will need to work at least one-third of their normal hours, to be paid as usual by their employer. For the remaining hours not worked, the Government and the employer will pay one-third of outstanding wages each. This works out at a total minimum payment of around 77% of the employee’s usual wages.
What does the expansion of the scheme look like?
In his latest announcement, Mr Sunak expressed that the Government will do “whatever is necessary to protect jobs and livelihoods”. As part of this, he announced the expansion of the Job Support Scheme, where the Government will pay two-thirds of employees’ salaries (up to a cap of £2,100 per month) for businesses that are forced to close their premises temporarily under Coronavirus restrictions, such as the enforcement of a local lockdown. This is likely to be used predominately in the hospitality sector, where cafes, restaurants, pubs, nightclubs and bowling alleys have faced forced closures during the crisis so far.
Under these measures, the employer will not need to contribute towards the affected employees’ wages, but they will need to cover their NICs and pension contributions. To be eligible, the employee will need to be furloughed for at least 7 consecutive days.
As with the rest of the Job Support Scheme, this expansion is valid from 1 November 2020 for an initial 6-month period, with a review due to take place in January 2021. Payments will be made in arrears, with businesses required to use the HMRC claims service that will be made available early December.
Update to cash grants
Mr Sunak also used this announcement to provide an update on cash grants to support fixed costs for businesses who have had to close due to local lockdowns. Eligible businesses will now receive up to £3,000 per month, rather than up to £1,500 per three weeks, and they are eligible for payment sooner, after only two weeks of closure rather than three.
We will keep you informed of all updates during this time so you can be aware of all the support being made available to you and your business. If you have any questions or enquiries, please get in touch with the team. You can contact the team here, or call our Southend office on 01702 466 886.
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