Last reviewed 12 October 2020

On 24 September 2020, Chancellor Rishi Sunak announced the new Job Support Scheme, aimed at helping businesses retain staff over the coming months and serve as a replacement to the Job Retention (furlough) Scheme. Ben McCarthy, lead researcher and employment law writer at Croner-i, explores key differences between these two schemes below.

One could almost be forgiven for getting a foreboding sense of déjà vu in these late September weeks, with the increase in coronavirus cases, and the return of social restrictions, feeling all too familiar to the weeks immediately prior to the original lockdown in March. Back then, with this new virus spreading rapidly and huge numbers of businesses being forced to close, all eyes turned to what assistance the Government was going to provide to help them through this period and retain jobs. This led to the birth of the Job Retention Scheme. When using this scheme, employers place their staff on a period of leave where they do no work, or reduced hours, known as furlough, and the Government funds part of their wages during this time.

Flash forward six months and here we are again, this time ready to welcome a new scheme, the Job Support Scheme. Here, the Government will also partly fund employee wages for hours not worked, but there are some key differences to this that employers need to be familiar with.

How are the schemes similar?

As many businesses can no longer operate as normal due to strict coronavirus restrictions, the aim of both schemes is to help employers keep staff in their roles even if there is less demand for them to do these roles. Both schemes work through the Government partially funding employee wages, subject to a cap, therefore providing an alternative for companies to explore rather than lay-offs and full redundancies. While the Job Retention Scheme was initially funded entirely by the Government, this changed in August to now be part-funded by employers. From day one, the Job Support Scheme will also be funded by both the Government and employers.

It is also important to remember that both are completely optional for businesses; there was and is no expectation upon a company to make use of either of the schemes and it is ultimately down to them how they respond to the challenges of the coronavirus pandemic.

How are the schemes different?

It is first important to understand why the Job Support Scheme has been announced by the Government, and why they have not decided to simply extend the Job Retention Scheme despite numerous calls to do so. Rishi Sunak did provide some answers to this in his speech, outlining that the Government cannot continue to fund jobs that are only still filled due to the Job Retention Scheme. His aim is to now support roles that can continue but simply need some further assistance; in his words, jobs that are “viable”. In short, whilst the Job Retention Scheme was primarily for retaining jobs when the company could not provide work, or had to reduce the work offered, in general the Job Support Scheme is there to help companies which are able to provide a minimum amount of hours unless the business is forced to close due to local or national lockdown measures.

In circumstances where a business has not been told to shut by the Government, the Job Support Scheme will require employees to work at least one-third of their normal hours to be eligible for government funds. This is a vast difference from the current rules of the Job Retention Scheme, as here employees can either not work at all or work reduced hours of any duration regardless of the current rate of coronavirus infections in the local area. Under the Job Support Scheme, the Government will only fund a third of employee wages attributable to the hours the employee does not work, which again differs from the Job Retention Scheme. The result is that the amount of government funding on offer is significantly less.

In scenarios where businesses are forced to close, the Job Support Scheme will provide two-thirds of employee wage costs despite the employee not working at all. Whilst this does bear some similarities to the Job Retention Scheme, in that employees will not have to work at all to benefit from it, there are still fundamental differences. This additional support is only being provided in the specific circumstance of a lockdown forcing business closure; it cannot be used if the business can remain open. Furthermore, the amount provided by the Government is still less than what was previously offered under the Job Retention Scheme.

The immense cost of the Job Retention Scheme has likely influenced the decision to restrict access to the Job Support Scheme. When it was originally introduced, the Job Retention Scheme was open to any business, regardless of size or sector. The Job Support Scheme is a little different. While any small to medium-sized enterprise (SME) will be able to make use of it, larger businesses will only be able to do so if they can show that their turnover has dropped. It is yet to be confirmed by the Government how “SME” will be defined for these purposes, and what will be considered a significant enough drop in turnover for larger businesses.

As the Job Support Scheme is designed to protect jobs, it is also not surprising to note that employees on the scheme cannot be given notice of redundancy, something that was not prohibited for those furloughed under the Job Retention Scheme.

What about the Job Retention Bonus?

Designed as another way of encouraging employers to retain their staff, employers who retain previously furloughed employees until at least 31 January 2021 will receive £1000 for each employee, subject to further eligibility. One thing that Rishi Sunak has made clear is that use of the Job Support Scheme will not impact on this; companies that reduce employee hours to make use of the Job Support Scheme will still be able to later claim the Job Retention Bonus provided the Bonus scheme’s criteria are met.

Conclusion

The Chancellor was clear to point out that, while the aim of both schemes was to provide assistance with the effects of coronavirus, it was important that the assistance on offer from November onwards reflects the evolution of the problems that businesses face. Because of this, it is obvious that there will be differences between the two schemes. The drawback, however, is that employers must now carry out a new set of calculations, apply new criteria and familiarise themselves with a new online portal that will undoubtedly be created via which employers will claim the funds.

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