On 12 October, Prime Minister Boris Johnson announced a three-tier alert level system for England in order to localise coronavirus restrictions according to the severity of cases in different regions. Being in Tiers 2 and 3 imposes increased restrictions on both indoor and outdoor socialising, leaving hospitality, leisure and retail businesses struggling due to reduced demand or closure. The introduction of the alert system has resulted in changes to the financial support available from the government through the Job Support Scheme (JSS), which is due to take effect in November 2020.
Pleas for help from Tier 2 businesses
Just before the official announcement of the tier alert system, the JSS was extended to support businesses that would be forced to close due to tougher restrictions. Under the new rules, the taxpayer would foot the bill for 67% of employees’ wages up to a cap of £2,100.
It wasn’t long before businesses in Tier 2 regions began to clamour for increased support, too. Many argued that they’d be better off in Tier 3, with much greater taxpayer funding and no running costs.
“Profound economic uncertainty”
In a speech to the House of Commons on 22 October, Chancellor Rishi Sunak acknowledged that even businesses that remained open were facing “profound economic uncertainty”, before announcing sweeping changes to the JSS.
What are the changes?
The JSS eligibility criteria has changed, making it more accessible for employees to use, the eligibility criteria is as follows:
- Employees only have to work 20% of their regular hours to be eligible.
- Staff on any type of contract are eligible, including those on variable or zero hours and agency workers.
- Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short time working arrangement must cover a minimum period of seven consecutive days.
- For the hours not worked, the employer pays 5% of the remaining salary (capped at £125 per month under the scheme, although employers can pay more if they wish).
- The government then pays 61.67% towards the remaining salary, capped at £1,541.75 per month).
- This means employees will receive at least 73% of their normal wages if they earn under the cap.
In addition, employers can also claim the Job Retention Bonus (£1,000) for every employee retained for three months following the end of the furlough scheme. Taking JSS Open and the JRB together, the government says, employers could have 95% of their employees’ wage costs covered if they retain them until February 2021. It’s also worth noting that JSS Open and JSS Closed can also be claimed simultaneously by the same business, for example in a restaurant that is required to close but still take takeaway orders.
Additional support for hospitality
Further financial support has also been announced for Tier 2 businesses working in the hospitality, leisure and accommodation sectors, in recognition of the disproportionate impact local restrictions are having on these firms. The support will take the form of cash grants of up to £2,100 per month and will be dispensed via local authorities. Importantly, these grants will be available retrospectively for businesses who have already been subject to restrictions. The government has said that around 150,000 English companies stand to benefit.
Here to support you
With the rules changing what seems like daily, it’s understandably hard to keep up. If you’re an employer struggling to work out what funding you’re entitled to, then get in touch with our Employment team at firstname.lastname@example.org.