Following the very recent introduction of the three-tier system across England and the new Job Support Scheme (JSS) the government has yesterday announced extra financial support in an effort to lighten the burden on employers.
Currently, under Tier 2 rules, people from different households cannot meet indoors. Under the stricter Tier 3 rules, people must not meet anybody outside their household or ‘support bubble’ in any indoor or outdoor setting. These restrictions are having a significant impact on the numbers of people visiting pubs, restaurants, cafes and other hospitality venues across the country.
Under Tier 3, businesses that are required to close due to local lockdown restrictions qualify for a support grant. We have seen the heated negotiations between local leaders and government to secure support grants at a level that will best support the local economy.
Until yesterday businesses in Tier 2 areas, such as London, did not qualify for this additional support and would only have been able to rely on the JSS (assuming they meet the eligibility criteria).
The Chancellor has announced yesterday that businesses in particularly affected sectors such as hospitality, leisure and accommodation and who are operating in a Tier 2 region are eligible for cash grants of up to £2,100 per month. These grants can be backdated to August.
In addition, the JSS that is set to commence from 1 November, after the furlough scheme ends, and which will apply to eligible businesses in all alert levels, has been amended as follows:
Employees will be required to work a minimum of 20% of their usual contracted hours (this is a reduction from the 33% originally announced). This means that employees working just one day per week will qualify.
In respect of unworked hours, employers will have to pay for only 5% of those hours, capped at £125 per month plus the usual national insurance and pensions contributions (this is a reduction from the 33% contribution originally announced).
The government will now make a contribution of up to 61.67% of the unworked hours capped at £1541.75 per month (this is an increase from the 33% originally announced, capped at £697.92).
13% of unworked hours will be unpaid.
The JSS will ensure employees earn a minimum of at least 73% of their normal wages, assuming that their usual monthly salary does not exceed £3,125.
For example, if a full-time employee receives £1,100 per month, they will still take home at least £807 a month. The employer will pay £283 a month; the government will pay the rest.
Employers can top up an employee’s wages above 5% if they choose to.
The Self-Employment Income Support Scheme is also being doubled from 20% to 40%, so that the maximum grant will increase from £1,875 to £3,750, over three months.
Plainly this is yet another push to try and avoid further job losses which are already estimated to be in the region of 500,000 since the start of the Covid crisis. The changes to the JSS, announced before the scheme has even come into force, reflect the immense pressure the government is facing from industry. We will have to wait and see whether the much more generous contributions by the government will be enough to save the thousands of jobs at risk, but we expect employers may now be much more likely to consider JSS a viable alternative to redundancy.
We are ready to advise you and your business during these challenging times. Please get in touch with your usual 3CS contact for further information.