Job Support Scheme For Open Businesses

The Government’s Job Support Scheme for Open Businesses was announced on 24 September 2020 by Chancellor, Rishi Sunak, in a statement to the House of Commons. The new style Job Support Scheme for Open Businesseswill replace the Coronavirus Job Retention Scheme when it ends on 31 October 2020. The Job Support Scheme for Open Businesses is aimed at supporting viable jobs by topping up pay for employees working reduced hours due to decreased demand. The Job Support Scheme for Open Businesses was amended in a statement to the House of Commons on Thursday 22 October 2020

UPDATES

Updated guidance is released regularly and I will update this page as more details are announced.

This page was firstly published on 24 September 2020 and the last update was 22 October 2020.

The Government say they cannot save every job and therefore the furlough scheme will end on 31 October 2020. The aim of the new package of support is to help businesses deal with suppressed demand over the winter months by supporting the wage demands of those in viable jobs and is intended as an alternative to redundancy.

What Is The Job Support Scheme for Open Businesses?

The new Job Support Scheme for Open Businesses involves the government supporting the wages of people in viable jobs by giving the employer the option of retaining people where there is work but not enough work and is an alternative to making them redundant.

The key features of the Job Support Scheme for Open Businesses are:

  • The Job Support Scheme for Open Businesses will run for six months from 1 November 2020, so will end on 30 April 2021.
  • Employees will need to work at least 20% of their normal hours and be paid normal pay normal pay for those hours. (I am assuming that they will actually need to be given work rather than just pay, but await clarity on that and whether it will need to be their normal duties).
  • Of the hours not worked the employer will pay 5% and the Government will pay 61.67% of the rest, at the normal rate of pay. The remaining hours will be unpaid.
  • The rate of pay will be calculated using an employee’s usual wages and will follow a “similar” methodology to the Coronavirus Job Retention Scheme.
  • Employers would have to agree reduced hours with the employee, and notify them to the employee in writing (in a similar way to agreeing furlough arrangements).
  • The government contribution will be capped at £1541.75 per month per employee. The government’s grant will not cover Class 1 employer NIC or pension contributions, they remain payable by the employer.
  • Working patterns can vary, but each short-time working arrangement must last at least seven days.
  • The employee must have been on the employer’s Real Time Information submission on or before 23 September 2020.
  • As with the Coronavirus Job Retention Scheme the employer must have a UK bank account and a UK PAYE scheme.
  • Employers will not be able to make employees redundant during the time they are claiming for them under the Job Support Scheme (but they could make other employees redundant if they are not claiming under the scheme in respect of them).
  • Employers retaining previously furloughed staff on reduced hours will be able to use the Job Support Scheme and claim the Job Retention Bonus as well.

The employer will be reimbursed in arrears for the government contribution. Claims can be submitted on a monthly basis from December 2020.

Example
An employee who usually works 36 hours a week, could work 7.2 hours a week (paid as normal by the employer) and of the remaining 28.8 hours: 5% (1.44 hours)would be paid by the employer, upto 61.67% (17.76 hours) would be paid by the Government and 9.6 hours would be unpaid. In financial terms, the employee would be paid approximately 78% of their usual pay for working 20% of their hours. The employer’s cost would be 25% of the employee’s usual pay.

Job Support Scheme For Closed Businesses

On 9 October 2020, Rishi Sunak announced an Job Support Scheme For Closed Businesses for businesses which are required to close due to local or national Coronavirus restrictions. The assistance will be in the form of grants to help pay the wages of staff who cannot work due to the restrictions.

Which Employees Will Be Eligible For The Job Support Scheme for Open Businesses?

All Small and Medium-Sized Enterprises are elgibile, regardless of their financial position.

Larger businesses, with 250 or more employees, will be eligible if, but only if, they can demonstrate their business has been adversely affected by Coronavirus crisis. The Government expects that large employers will not be making capital distributions (such as dividends), while using the Job Support Scheme.

The Job Support Scheme for Open Businesses is open to all employees, even if they were not previously furloughed.

The employee must not have been made redunant or be working through notice of redundancy during any period within which a claiming is made for the Job Support Scheme grant. That is a different position to the Coronavirus Job Retention Scheme, where the scheme did pay out for employees working their redundancy notice.

Employers retaining furloughed staff on short time working arrangements can claim under the Job Support Scheme and the Job Retention Bonus (a £1,000 one-off payment for furloughed employees who remain continuously employed through to 31 January 2021, subject to eligibility criteria).

Reaching Agreement

Employers must agree the new reduced working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.

Top Tips

If you had already started or are considering redundancies you will need to look carefully at the costs and practical implications of using the new scheme as an alternative to some, or all, of the redundancies you were proposing.

Where you have some work but not enough work for everyone you will need to consider whether you can guarantee at least 20% of normal working time each week. For any week that you are unable to offer the minimum amount of work you will be unable to claim the grant for that employee or group of employees.

When you look at the finances it might be it will cost you less to keep a few employees on their normal contractual working hours and make the others redundant.

If you decide the Job Support Scheme for Open Businesses is not viable you will need to consider implementing redundancies. If you are currently relying on the Coronavirus Job Retention Scheme you will need to consider when your consultation period will need to start if you don’t want the wages costs to take you beyond the end of Coronavirus Job Retention Scheme.

I can provide step-by-step guidance about when the consultation period should begin and exactly what a redundancy procedure involves. See my Fixed Price HR Project: Provide Support While You Manage a Redundancy Situation

What’s Next?

The minimum 20% threshold hours for which an employee must work may be increased in months 4-6 of the Job Support Scheme.

Further detail on the Job Support Scheme will follow in the coming days and weeks and we shall endeavour to keep you up to date with the detail.”

If you have any questions please call me on 0114 360 0626 or simply email me at enquiries@kea-hr.co.uk.

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Job Support Scheme for Open Businesses