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Insights // 24 September 2020

What is the Job Support Scheme? The Government's "Winter Economy Plan” Explained

Partner Sue Dowling, head of our Employment Law team, looks at the Government's "Winter Economy Plan” and the new Job Support Scheme announced on 24 September 2020.

The Chancellor, Rishi Sunak, today unveiled the Government’s “Winter Economy Plan”, which it says aims “to protect jobs and support businesses over the coming months.”

Mr Sunak explained that: “The resurgence of the virus, and the measures we need to take in response, pose a threat to our fragile economic recovery. Our approach to the next phase of support must be different to that which came before.”

The Job Support Scheme

Following the upcoming end of the Coronavirus Job Retention (“Furlough”) Scheme on 31 October 2020, the Government has announced a new Job Support Scheme that will be introduced from 1 November 2020 for a period of six months, in order to protect what it refers to as “viable jobs in businesses who are facing lower demand over the winter months due to Coronavirus.”

The basic parameters of the Scheme are that:

  • Employees will need to work a minimum of 33% of their usual hours for which they are paid by the Employer in the usual way;
  • For every hour (of the usual hours) not worked, the employer and the Government will each pay one third of the employee’s usual pay, but the Government’s contribution will be capped at 697.92 per month.

The effect of the above (when an employee works 1/3 of their usual hours (33%)) is that for the 2/3rds remaining hours (the employee is not working), they receive pay for 22% of those hours from the employer and 22% from the Government (provided that the latter does not exceed £697.92). In this instance, the employee will receive 77% of his/her pay (provided that the Government capped contribution of £697.92 is not exceeded).

The new Job Support Scheme will be open to small and medium sized (SME) employers across the UK, including those who have not previously taken advantage of the “Furlough Scheme”, with further guidance to be published soon. Larger organisations will be required to prove that their profits have been affected by the pandemic in order to benefit from the Scheme.

Employers will not be able to issue redundancy notices whilst part of this Scheme.

The precise Rules relating to this new Scheme are not available as yet but we will update our website once known.

The previously announced Job Retention Bonus Scheme remains unaffected.

The Self Employment Income Support Scheme

The Self Employment Income Support Scheme (SEISS) grant will also be extended, beyond its original planned end date of 31 October 2020.

A taxable grant worth 20% of average monthly profits, up to a total of £1,875, will cover the period 1 November – 31 January 2021. The grant will be made available to those who are eligible for the existing Scheme and continue to trade but face reduced demand.

A second grant, full details of which may be determined nearer the time, will be available for self-employed individuals to cover the period from February 2021 – April 2021.

Again, further guidance on the SEISS is expected soon.

Other measures

At least some employers will be given more time and greater flexibility when it comes to repaying a “Bounce Back Loan”, with the maximum term extended from six to ten years.

The deadline by which businesses can apply for a Coronavirus Business Interruption Loan has been pushed back to 30 November 2020, whilst the Government will now guarantee these loans for up to ten years.

VAT for those in the hospitality and tourism sectors will remain at 5% (instead of the usual 20%) until 31 March 2021, extended from January.

If you require further advice as an employee about your own situation or possible redundancy, or as an employer, advice in relation to the above Schemes and/or about the costs, merits or risks of implementing restructuring plans or a redundancy programme within your organisation, please contact us for helpful strategic Employment Law advice. 

For further information or legal advice, please contact law@blandy.co.uk or call 0118 951 6800. 

This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.

Sue Dowling

Sue Dowling

Partner, Employment Law & Venue Licensing

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