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Feeling a bit confused about the various support packages that the government is currently unveiling? We get it: it’s hard to keep up with the different types of support that are being set out at the moment. With the end of the furlough scheme looming, other support systems have been announced. But what do they all mean? Here we’ll lay out the details of the Job Security Scheme – called “furlough 2.0” by some.
The Job Security Scheme was announced by Chancellor of the Exchequer Rishi Sunak on 24 September. Also known as the Job Support Scheme, and often abbreviated the JSS, the Job Security Scheme is a wage subsidy programme designed to support people through the ongoing economic storm that COVID-19 is causing.
It’s hoped that it will lessen the number of redundancies that companies will need to make when the current furlough system (aka the Coronavirus Job Retention Scheme, or CJRS) closes on the 31st October. It has also been planned to support those industries that are likely to have less demand over the winter months.
It will allow employers to share the wages of staff who are working reduced hours with the government, hopefully avoiding the need for redundancy.
The Job Security Scheme is a bit more complicated than the 80/20 split that we saw with the furlough scheme. We’ll do our best to lay it out simply here, though.
Essentially, it’s an opportunity for businesses to claim a reimbursement for the hours not worked by an employee over the winter. A third of the hours not worked (due to these reduced working hours) will be paid by the Government. A further third will be paid by the employer. The last third is forfeit (lost) by the employee. This means that employees can expect to be paid a minimum of 77% of their normal wage, even if their hours are cut.
In real terms, this means that, for the first three months of the scheme, the employee must work at least 33% of their usual hours. They will then be paid for this work by their employer as they usually would be. You can work more hours than this, and your employer must pay you in full for all hours worked. They also have to keep their pension contributions and National Insurance payments up, too. Any hours you’re contracted to work, but don’t work, are covered by your employer and the Government (a third each), with the final third not covered (a loss of one third in wages on only those unworked hours).
The Government’s contribution to the scheme will be capped at £697.92 per month. After three months, i.e. at the end of January, they are likely to consider whether they increase the minimum hours threshold.
The Job Security Scheme will be open from 1st November, and is currently set to run until 31 April 2021. As it is designed to cover the wages of staff on reduced hours over winter, if support is still needed next spring it is likely that it will be replaced with something else.
The Government are playing a tight balancing act with minimising unemployment and business closure while trying not to accumulate an impossible amount of debt. There are some areas, however, where it is still unclear what the job schemes and other funding for employees, freelancers, and businesses will look like in 2021 onwards.
Like furlough, the JSS covers only certain workers.
The good news is that the Job Security Scheme is open to UK businesses across all sectors. There is no financial assessment needed for small and medium sized businesses that want to take advantage of it.
Large businesses need to prove that their turnover is lower than it was before the COVID-19 pandemic began. They will also not be allowed to make capital distributions (e.g. pay their directors with dividends) whilst they are using the scheme.
We aren’t yet sure about what will constitute a small, medium or large business for the purposes of the Job Security Scheme. However, it can reasonably be assumed that small and medium sized businesses will be those that have fewer than 250 members of staff.
As an employee, you need to have been registered on your company’s payroll on or before the 23rd of September this year to be eligible for the Job Security Scheme. If you have been made redundant and are currently in a consultation period, you will not be eligible.
Eligibility for employees who are on sick leave or may need to shield, or are on annual or parental leave, has not yet been confirmed. It also hasn’t been made clear what will happen if you’re unable to work because your company temporarily closes, for example if you work at a bar or a gym in a Tier 3 area. It does appear that local funding will be made available to support businesses forced to close in Tier 3 zones by law; this currently varies from region to region.
All other employees are eligible for the scheme, including those on casual hour contracts. If this is you, you won’t need to be working the same days or hours each month to be eligible. Employees can “cycle” on and off the scheme, as long as each short-time working arrangement covers at least seven days.
Like the furlough scheme, the JSS is only for PAYE employees. Self-employed contractors, freelancers and owners of Ltd companies aren’t eligible.
If you’re an employee, you don’t need to worry about applying for the Job Security Scheme yourself. Employers are the ones that need to apply, so make sure you discuss with your boss whether or not they’ll be making an application.
Employers will be able to claim their reimbursement from the Government online from December. Exact details of exactly how to do this haven’t yet been laid out. Payments to employers will be in monthly arrears.
Of course, not everyone will qualify for the scheme. If you’re self-employed, for example, this won’t be a scheme that you’re able to benefit from. The Self-Employed Income Support Scheme (SEISS) has been extended, though. If this is your situation you should register in order to receive your next SEISS payment. This will be paid in November. More on that here.
As mentioned, there are certain groups that the government has not clarified its position on when it comes to the Job Security Scheme. Whilst we wait for more information, and hope that the government is forthcoming with it, we recommend ensuring that you are aware of all the benefits that you’re entitled to.
Have you got a question about the Job Security Scheme? Head on over to the forums to ask other Magpies for their thoughts.
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