New Job Support Scheme launches in UK as furlough scheme ends

The government's new 'Job Support Scheme' (JSS) launches tomorrow, 1 November, amid rising coronavirus cases across the country and calls for a second national lockdown in England.

The JSS covers all Nations of the UK. For every hour not worked, the employee will be paid up to two-thirds of their usual salary. The government will provide up to 61.67% of wages for hours not worked, up to £1541.75 per month. The cap is set above median earnings for employees in August at a reference salary of £3,125 per month.

Employers using the scheme will also be able to claim the Job Retention Bonus (JRB) for each employee that meets the eligibility criteria of the JRB. This is worth £1,000 per employee. Taking JSS-Open and JRB together, an employer could receive over 95% of the total wage costs of their employees if they are retained until February.

There are different types of support depending on the extent to which you are experiencing reduced business activity due to coronavirus.

If a business is still operating but has been impacted by coronavirus (COVID-19), then it could be able to claim through the Job Support Scheme (JSS Open).

JSS Open is a grant payment that covers 61.67% of the employee’s wages for hours not worked, up to a total grant cap of £1,541.75 per month. Employers will also have to contribute 5% of the cost of hours not worked up to £125 per month for each employee.

Employers still need to deduct and pay the taxes and employee National Insurance contributions (NICs), and pay employer NICs to HMRC on the full amount paid to the employee, including any grant from the scheme. They must also still pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped saving into their pension. If applicable, Student Loan deductions and the Apprenticeship Levy must also still be paid.

Businesses will be able to claim if they are still operating but they have:

- reduced some, or all, of your employees’ hours, but they are still working at least 20% of their usual hours (across a claim period)
- put those employees on a JSS Open temporary working agreement

If a business is required to close, and have instructed employees to cease work, as a direct result of Health Protection Regulations put in place by the UK government or a devolved administration , they could claim the Job Support Scheme Closed.

(The Chancellor of the Exchequer, Rishi Sunak / Photo by HM Treasury)

JSS Closed is a grant payment that covers 66.67% of the employee’s wages, up to a total grant cap of £2083.44 per month.

Employers will still need to deduct and pay the taxes and employee National Insurance contributions (NICs), and pay employer NICs to HMRC on the full amount paid to the employee, including any grant from the scheme. They must also still pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped saving into their pension. If applicable Student Loan deductions and the Apprenticeship Levy must also still be paid.

More details are provided in the government's website. Information for self-employed can be found here. 

Chancellor of the Exchequer, Rishi Sunak, said:

"I’m pleased that the IMF this week called our response to the pandemic one of the best examples of coordinated action globally - the furlough scheme has been central to that, supporting 9.6 million jobs through some of the most challenging economic times.

"But it’s right that as we move towards a more targeted approach to tackle the virus, our support becomes more targeted too.

"The Jobs Support Scheme will continue to protect jobs throughout the difficult months ahead and is part of our comprehensive Plan for Jobs."

Case studies

Example 1 – Job Support Scheme Open

- Andrew normally works 5 days a week and earns £1400 a month, working in at a restaurant in the hospitality sector. His company is suffering reduced sales due to coronavirus. Rather than making Andrew redundant, the company puts Andrew on the Job Support Scheme, working 20% of his usual hours.

His employer pays Andrew £280 a month for these hours.

And for the time he is not working (80%), he will get 66.67% of his pay for that time. His total wage package is 73%, equal to £1,027. The government will give a grant worth £691 (61.67% of hours not worked) to Andrew’s employer to support them in keeping Andrew’s job, and his employer will pay a further £56 for hours not worked (5% of wages).

In addition, the employer will cover the Employer NICs and autoenrollment pension contribution on the payment (£56).

His employer may also be eligible for the Job Retention Bonus worth £1,000, this would cover 94.6% of employers total costs for retaining

Andrew on the JSS between November and January.

For many lower earning employees on Universal Credit (UC), the combined impact of the support of the JSS and UC will mean they could receive around 90% of their normal net income (whilst working only 20% of the hours).

Example 2 – Job Support Scheme Open

Elena normally works part-time and earns £1,100 a month. Her company is suffering reduced sales due to coronavirus. Rather than making Elena redundant, the company puts Elena on the Job Support Scheme, working 20% of her usual hours.

Her employer pays Elena £220 a month for these hours.

And for the time she is not working (80%), she will get 66.67% of her pay for that time. Her total wage package is 73%, equal to £807.

The government will give a grant worth £543 (61.67% of hours not worked) to Elena’s employer to support them in keeping Elena’ job, and her employer will pay a further £44 for hours not worked (5% of wages).

In addition, the employer will cover the Employer NICs and autoenrollment pension contribution on the payment (£19).

Her employer may also be eligible for the Job Retention Bonus worth £1,000, this would cover over 100% of employers total costs for retaining Elena on the JSS between November and January.

For many lower earning employees on Universal Credit (UC), the combined impact of the support of the JSS and UC will mean they could receive around 90% of their normal net income (whilst working only 20% of the hours).

- Example 3 – Job Support Scheme Closed

Charlie normally earns £1,400 a month and his company needs to close due to coronavirus. Rather than making Charlie redundant, the company puts Charlie on the Job Support Scheme Closed.

The government will give a grant worth 66.67% of Charlie’s pay to his employer to support them in keeping Charlie’ job.

That means for the time he is not working, he will get 66.67% of his pay. His total wage package is equal to £933.

The employer will cover the Employer NICs and autoenrollment pension contribution on the payment.

For many lower earning employees on Universal Credit (UC), the combined impact of the support of the JSS and UC will mean they could receive around 90% of their normal net income (whilst working only 20% of the hours).

- Example 4 – Job Support Scheme Closed

Dalia normally earns £1,100 a month part-time and her company needs to close due to coronavirus. Rather than making Dalia redundant, the company puts Dalia on the Job Support Scheme Closed.

The government will give a grant worth 66.67% of Dalia’s pay to her employer to support them in keeping Dalia’s job.

That means for the time she is not working, she will get 66.67% of her pay. Her total wage package is equal to £733.

The employer will cover the Employer NICs and autoenrollment pension contribution on the payment.

For many lower earning employees on Universal Credit (UC), the combined impact of the support of the JSS and UC will mean they could receive around 90% of their normal net income (whilst working only 20% of the hours).