How the new Job Support Scheme will work

  • Describe how the Job Support Scheme will work
  • Describe a drawback of the scheme
  • Identify an alternative for helping struggling companies

Sadly, it does not appear the Job Support Scheme will avoid a swathe of redundancies over the coming months as employers seek to manage their cashflows to survive the winter months.

This will be most acutely felt in the hospitality, leisure and tourism sectors and likely to lead to widespread job losses in the young with the age group of 16-24 most likely to be employed in these sectors and so the greatest effected age bracket. 

JSS grant payments will be made monthly in arrears commencing in December, reimbursing the employer for the government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.

This means that the overall cost of employment for employers is higher than simply their contribution to employee salaries.

An unexpected silver lining to the scheme is that employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

This is a payment of £1,000 for every employee previously furloughed who remain employed continuously until 31 January 2021. These payments will be made to the employer in February 2021. 

For those that are self-employed there was also an extension to the Self-Employed Income Support Scheme. As with the JSS the schemes eligibility criteria remained the same, but the amounts received reduced to 20 per cent of average monthly income.

The extended SEISS will run for the six months from 1 November through to 30 April with the grant payments made in two tranches each representing three months.

The disparity in impact for the self-employed is significant with those in the arts often having no income while those in other sectors still trading but at reduced levels.

This extension for those in the arts with no income will be woefully inadequate and targeted sector support needs to be considered.

The above measures tweaked and extended existing support measures but did not address any of the inherent unfairness of the previous support measures.

A large proportion of the workforce are not captured by either measure but have suffered equally during the pandemic.

For those self-employed, no effort has been made to address the cliff edge for those earning over £50,000 who have received no support or those people who became self-employed shortly before the pandemic.   

Additionally, many small business owners remunerate themselves with small salaries and dividends from the profits of their business.

The support measures make no allowance for those who normally receive a dividend and again these business owners have been forgotten.

Small businesses being those employing up to 49 people account for 99 per cent of all UK businesses and over 60 per cent of the workforce.