Government’s Job Support Scheme expanded to aid businesses forced to close due to Covid-19

13th October 2020

Following criticism that the Job Support Scheme does not go far enough and with the new tier system of more severe local restrictions being introduced, the government has responded more flexibly and announced that the Job Support Scheme (JSS), due to come into force from November, is to be expanded to cover firms forced to shut by law because of Covid-19 restrictions. Rather than an expansion however, this is very different to the Government’s stated aim last week of protecting viable jobs and not being able to save every job. The revised scheme will see employees at affected businesses receive two-thirds of their wages for six months. This is less than the 80% of salary (subject to a cap) which employees originally received under the furlough scheme initially, so is less generous.

The extension of the JSS now means if a business has been legally required to close by any of the governments of England, Wales, Scotland or Northern Ireland, its workers will be eligible to receive wages in the form of government grants. This does not include employers who choose to close due to the impact of the pandemic. In line with the previously announced JSS criteria, affected employers must have a UK PAYE scheme registered on or before 23 September.

The government has confirmed that eligible businesses will include those that have been restricted to delivery and collection services only, such as restaurants with a takeaway service. Up to £2,100 per month will be paid for each employee, provided that the employee has been furloughed for a minimum of seven consecutive days as a result of the business closure. An increase in grants to businesses also forms part of the financial package, with up to £3,000 per month now available to firms which have closed.

The JSS was originally unveiled in September and from 1 November will provide employees working at least a third of their normal hours with a grant from the government covering part of the hours that are unworked. This will replace the Job Retention Scheme, which ends on 31 October, however in many respects it is a revised extension of the furlough scheme. Similar to the core JSS, the expanded scheme for closed business premises will be reviewed in January.

The government hopes that the expanded JSS will give businesses forced to close under the law enough financial stability to enable them to re-open once restrictions are lifted and not make redundancies. However, employers will still need to pay NI and pension contributions, so it may not be sufficient to stave off further redundancies. The increase in support is timely as many parts of the country enter into, or approach, a period of tighter local lockdowns over the autumn and winter months, but only time will tell whether it will have the desired effect.

To read more about the JSS and what it means for employers and employees, click here.

Authors: Michelle Chance & Reece Lawrence