The UK Chancellor has outlined additional government support to help businesses and workers impacted by COVID-19.

There had been calls from businesses for the chancellor to help protect jobs once the Coronavirus Job Retention Scheme (CJRS) ends on 31 October 2020. As a result the chancellor has announced the new Job Support Scheme which will be introduced from 1 November to protect viable jobs in businesses facing lower demand over the winter months due to COVID-19. The scheme protects employees who are in work and will contribute towards the wages of employees who are working fewer than normal hours due to reduced demand.

The proposal is that employees must be working at least 33 % of their usual hours. Employers will continue to pay the employees for the wages for the hours that they work. For the hours that the employee doesn’t work, the employer and the government will pay one third each of the equivalent salary. As with the CJRS employers will need to agree the short-time working arrangements with their staff and make any changes to the employment contract in agreement with the employee and notify the employee in writing. This will be particularly important as the employees will be accepting a reduction in their usual hours and salary.

The Job Support Scheme is open to businesses across the UK even if they have not previously used the furlough scheme, but is focused on the businesses being impacted by Coronavirus and who can support their employees doing some work, but need more time for demand to recover. It is open to small and medium enterprises (SMEs) but large businesses will have to meet a financial assessment test. This means that they will have to show that their turnover is lower than before experiencing difficulties as a result of the pandemic. Further information on the financial assessment test will be set out in guidance but the expectation is that large employers will not make capital distributions while accessing the grant under the scheme.

The employer can only make a claim in respect of an employee who is on the employer’s PAYE payroll on or before 23 September 2020. In addition, to count as a “viable” job, the employee must work at least 33% of their usual hours. The government will review this level after 3 months to determine whether it should be increased. The employee can come on and off the scheme, but each arrangement must cover a minimum seven day period.

As set out above, for every hour not worked the Government and the employer will pay a third each of the usual hourly wage for that employee. Therefore, if an employee is working for 33% of their work, then the employer will pay an additional 22% of the amount to be paid (paying 55% in total), and the government will pay 22% to the employee. The employee will therefore be receiving 78% of their normal earnings. The grant paid by the government will be calculated on the employee’s usual salary, capped at £697.92 per month. Determining the level of “usual wages” will be calculated in a similar way to the CJRS.

The grant can only be made for viable jobs and therefore employees cannot be made redundant or put on notice of redundancy during the period within which the employer is claiming the grant for that employee.

The scheme will be open for a period of six months from 1 November 2020 to the end of April 2021 and grants will be payable in arrears and paid on a monthly basis. Employers will be able to make a claim online from December 2020.

Examples of the grants that can be made are set out in the Job Support Scheme Factsheet and further guidance will be published shortly.