Travlaw partner and head of employment Ami Naru considers the impact on the travel industry
The Job Support Scheme (JSS) was originally announced on September 24 as a scheme to support “viable jobs” in businesses facing reduced demand over the winter months due to Covid-19.
The government’s objective at that time was to encourage short-time working rather than redundancies.
Subsequently, on October 9 the government extended the scheme to provide support to businesses whose premises have been legally required to close under local lockdown measures and tier three in England (JSS Closed, as opposed to JSS Open).
The JSS Open scheme was significantly amended on October 22 to address the disparity in government support compared with JSS Closed and reduce the minimum number of hours employees must work to be eligible for support from 33% to 20%.
Government guidance on both the JSS Open and Closed schemes is due at the end of October, leaving very little time for employers to digest before the JSS goes live on November 1.
This is what we know so far about the Job Support Scheme:
- The Job Retention Scheme (furlough) will end on October 31, and be replaced by the Job Support Scheme which will start on November 1 and end on April 30, 2021.
- JSS Open has been set up to protect jobs for employers facing lower demand over winter months due to Covid-19.
- Employers must demonstrate they have viable jobs. What is meant by viable has not been defined as yet, but we know employees can’t be made redundant or be serving a contractual or statutory notice period. This is a significant shift from the furlough scheme, where this was possible. It is unclear at this stage whether employers can start redundancy consultations with employees on the JSS.
- Employees must work at least 20% of their normal hours, for which the employer must pay their normal rate of pay. The government has already said the 20% threshold of minimum hours worked will be in place for at least the months of November, December and January.
- After the initial three months the government may consider increasing the minimum threshold for hours worked. The JSS will therefore only be attractive to employers if there is work to be done.
- If there is no work to be done because there is simply no work, this scheme is unlikely to help employers and stop redundancies happening. This is another significant change in that under furlough there was no requirement for work to be done. Now, with the emphasis on viable jobs, there is a requirement that work be done.
- The government together with the employer will increase those employees’ wages, covering almost 2/3 of the pay they have lost by reducing their working hours. The employee will forgo the remaining 1/3 of the hours not worked. The employer contribution in this respect has significantly dropped to 5% from the original 33%.
- Employers should be aware that the JSS grant will be paid by the government in arrears, by way of reimbursement of wages incurred. Therefore employers will have to ensure they have the means to pay wages to the employee, as the grant will be paid out upon evidence of wages being paid.
- Employers should also be aware they remain responsible for all Class 1 employer National Insurance and pension contributions on wages paid to employees on the JSS. The grant will not cover this.
- “Usual wages” for the purposes of the JSS should be calculated by the same methodology as under the furlough scheme.
- The government will pay a maximum of £1,541.73, towards unworked hours, which is a significant increase from the £697.20 per month in the original plan. This is a welcome improvement.
- All SMEs are eligible.
- Larger employers (with more than 250 employees) will be required to undertake a financial impact test showing turnover has remained equal or fallen due to Covid-19 – not a hard hurdle to clear for most employers in the travel industry.
- Employers who have not furloughed staff can also take part in the scheme.
- Employers who are eligible for the Job Retention Bonus can claim under the JSS Open.
- Employers can make claims under the JSS Open and JSS Closed schemes simultaneously, but not for the same employee.
So can employers just put staff on the JSS?
First, they need to get the employee’s agreement to short-time working and record this in writing. If the employee agrees, the employer must ensure the employee works at least 20% of their normal hours.
The employer then needs to make payment for the worked hours in the normal way and pay 2/3 of the non-worked hours (while awaiting reimbursement of 61.67% from the government), together with NICs and pension costs for all wages paid to the employee.
In the meantime, the employer can’t make the employee redundant or give notice of redundancy.
So, in summary, the employer must have work to be done, be able to pay wages and not want to make the employee redundant for the claim period – the JSS is only meant for viable jobs.
Most travel industry employers have used the furlough scheme to delay making redundancies where this was possible.
There were some employers at the outset who were unable to keep jobs open as the furlough scheme was not enough and there has been a raft of redundancies since.
Will the JSS Open scheme stop redundancies happening? Probably not – if employers do not have work even for 20% of hours, there is not a viable job.
Could JSS Open delay redundancies in the industry? Possibly, if employers can get through the winter months and afford to pay employees for the hours worked. However, this is heavily dependent on what other measures the government puts in place for the travel industry.
The JSS Closed will have less significance for the travel industry as a significant number of jobs can be done from home. However, under the JSS Closed eligible employers will be able to claim the JSS Closed grant for employees:
- Whose primary workplace is at premises that have been legally required to close as a result of coronavirus restrictions set by one or more of the four governments of the UK;
- Who cease work for a minimum period of at least seven consecutive calendar days on instruction by their employer.
The government will pay two-thirds of eligible employees’ normal pay up to £2,083.33 per month.
Employers will not be required to contribute to employees’ pay, but they will be required to cover employer Class 1 NICs and pension contributions.
Ami Naru is partner and head of employment at Travlaw