Chancellor Announces Fresh Support Package For Businesses & Workers

Gary Green
Gary Green
October 23, 2020

Chancellor Rishi Sunak has unveiled further support for businesses and workers affected by the coronavirus pandemic following growing calls from industry leaders.

The chancellor announced sweeping changes to the Job Support Scheme (JSS), which is set to replace the current 'furlough’ scheme at the end of this month.

Businesses under tier two restrictions had argued they would be similarly affected to those in the higher tier - without being able to benefit from the greater government support.

Having changed the terms of the JSS, Mr Sunak admitted "it is clear that they require further economic support" during a press conference with Prime Minister Boris Johnson on Thursday afternoon.

It is the second major amendment the Chancellor has made to the JSS since it was announced last month. We rounded up the previous changes on our blog here.

What were the key takeaways?

• The new Job Support Scheme will be made more generous
• Workers need to work a minimum of 20 per cent of hours to be eligible
• Businesses will pay just 5 per cent of wages - down from around 55 per cent
• Self-employed people will be eligible for grants up to £3,750
• New grants for businesses in Tier 2 areas

How does it work in detail?

Previously, employees on the Job Support Scheme would have needed to have worked a minimum of 33% of their usual hours to be eligible. Now, they need to work a minimum of 20% of hours to qualify for the scheme. For hours they don’t work, they will receive 66.7% of their wages paid while losing 33% of pay.

Workers’ wages will be made up of the government paying 61.7% of their non-worked hours, while employers will pay the remaining 5% - down from the 55% previously announced. Employers will be required to pay for a minimum of 20% of usual hours worked, and 5% of hours not worked.

The government will contribute a maximum of £1,541.75 per month, while employers will need to contribute a maximum of £125 a month. Employees will still receive full pay for their normal worked hours.

The caps are based on a monthly salary of £3,125 a month, as cited by HMRC. It means that a full-time employee earning £1,100 per month would receive £807 a month. The employer would pay £283, while the government will pay the rest.

Scheme Government pays Employer pays Pay falls
Original 'furlough' scheme 60% 20% 20%
Tier 3 Job Support Scheme 67% 0% 33%
Original Job Support Scheme
(working at least 33% of hours)
33% 33% 33%
New Job Support Scheme
(working at least 20% of hours)
61.67% 5% 33%

Who is eligible?

Staff on any contract are eligible, including those on zero-hours or agency workers. They must work a minimum of one day a week to meet the criteria.

What about pension and national insurance contributions?

Employers are still expected to cover the cost of workers' pension and national insurance contributions, if applicable. This remains unchanged changed following Thursday’s announcement.

Grants for businesses under Tier 2 restrictions

Businesses hit hardest by Tier 2 rules will be able to claim a retrospective grant, allowing them to access up to £2,100 for every month they are under the restrictions.

Companies who have been under the restrictions since August will be able to back-date their claims.

All employers with UK-based bank accounts and UK PAYE schemes are eligible for the grant. There is no prerequisite to have used the current furlough scheme in order to apply.

Large companies (with over 250 employees) must meet a financial impact test before being awarded the grant, judged on whether their turnover has stayed the same or is lower than before the coronavirus pandemic.

There is no financial impact test for SMEs or charities.

Help for the self-employed

Self-employed people will able be able to benefit from an enhanced government grant of up to £3,750 - doubling the current support available.

The Treasury had previously announced it would cover 20% of average monthly profits, up to a maximum of £1,875, to cover November to January next year.

But the grant will now be increased to 40%. A second grant will also be made available for self-employed workers to cover February 2021 to the end of April.

The terms of the second grant have not yet been announced, although it is expected to be less than the initial offering.

If you would like to discuss how the latest announcement affects your business and your eligibility, please do not hesitate to get in touch with our experienced team who will be happy to assist you.

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