The Chancellor has announced in the House of Commons and through a press release that the government will significantly increase the generosity and reach of its winter support schemes and ensure livelihoods and jobs across the UK continue to be protected in the difficult months to come. The Chancellor recognised that "even businesses which can stay open are facing profound economic uncertainty".
The headlines from the announcement are as follows:
Job Support Scheme – Open
The original JSS announced on 24 September 2020 required employees to work a minimum of 33% of their normal hours and employers required to pay a third of their employees' wages for hours not worked. The announcement from the Chancellor reduces employer contribution to those unworked hours to just 5% and reduces the minimum hours requirement to 20%. Full time employees working one day a week will be eligible.
Key details include:
- The JSS will operate from 1 November 2020 across the UK. For every hour not worked, the employee will be paid two-thirds of their usual salary.
- The government will provide up to 61.67% of wages for hours not worked, up to £1,541.75 per month.
- The cap is set above median earnings for employees in August at a reference salary of £3,125 per month.
- Employers will continue to receive the £1,000 Job Retention Bonus for eligible employees (please see our Legal Update for further information). Taking the JSS-Open and the Job Retention Bonus together, an employer could receive over 95% of the total wage cost of their employees if they are retained until February.
- There has been no amendment to the local lockdown element of the JSS. Please see our previous Legal Update for an outline of the scheme.
With a focus on the hospitality, accommodation and leisure sectors, further funding is available to provide cash grants of up to £2,100 per month. The funding is primarily aimed at those adversely impacted by the restrictions in high-alert areas. The Chancellor announced that these grants will be available retrospectively from August for areas which have already been subject to restrictions. The grants are on top of higher levels of additional business support for Local Authorities moving into Tier 3. According to the press release these grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more which are not legally required to close but have been impacted by the local restrictions causing a significant drop in turnover.
The Chancellor's announcement increases the amount of profits covered by the two forthcoming self-employed grants from 20% to 40% meaning the maximum grant will increase from £1,875 to £3,750. This represents a further £3.1 billion of support to the self-employed between November and January. A further grant will follow covering February to April 2021.
The support offered recognises the knock on impact of the pandemic on businesses which can remain open but have suffered significantly due to the restrictions. The amount of employer contributions under the original JSS received widespread criticism with businesses already under considerable financial pressure. The JSS-Open alleviates much of this pressure and may help to reduce the number of redundancies.