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The Job Support Scheme (JSS)

How it works and what you need to know

Summary for Negotiators 

  • The JSS offers an opportunity to engage with employers about financial support from Government to avoid redundancies 

  • We need to convince employers to use the scheme to save jobs – some will be reluctant and we will need to line up the arguments to do so 

  • We need to make employers aware of the ability to use the Job Retention Bonus to offset costs associated with the JSS 

  • There are many other arguments for not making employees redundant 

  • GMB will be lobbying politically for better support from Government 

How does the JSS work?

The .gov.uk information page is https://www.gov.uk/government/publications/job-support-scheme. The scheme runs from 1st November 2020 until the end of April 2021 and is capped at £697.92 a month per employee. As with the furlough scheme, the JSS is a scheme where the employer applies for the money – individual employees cannot apply for the scheme. 

The JSS will, in a limited way, top up the pay of employees who are working reduced hours: 

Example 1 – working 1/3rd of normal hours 

In this example, the employee works 1/3rd of their usual hours and receives 77% pay. 

The employer gets 1/3rd of hours works and has to pay the employee 55% of their usual pay. 

Example 2 – working half of normal hours

In this example, the employee works for half of their usual hours and receives 84% pay. 

The employer gets half of hours worked and has to pay the employee 67% of the hours worked. 

Table of payments (from https://www.gov.uk/government/publications/job-support-scheme

The following table shows the distribution of costs: 

 

Extension to the JSS

The JSS has been extended to include additional grants for businesses that are closed down due to Coronavirus restrictions. These additional arrangements are only available for businesses whose premises are legally required to shut for some period over winter as part of local or national restrictions - it doesn’t cover businesses who shut down due to lack of trade or financial difficulties – e.g. the supply chain, restaurants who have restricted hours imposed on them, etc. 

Details of the extended scheme can be found here.

These changes will be of limited use due to the very narrow range of businesses that will be eligible to claim. For those that can claim it will mean a similar arrangement to furlough (with two thirds of wages met by Government with a monthly cap of £2,100 and employers expected to pay NI and pensions costs) and cash grants of up to £3,000. 

Where the JSS will help? 

Employers who want to keep employees in employment after the furlough scheme ends but don’t have sufficient work for them to do will now receive the financial help outlined above (so long as employees are back in work for at least 1/3rd of their usual hours). 

Where reduced hours arrangements are in place, payments to employers will be enhanced but this is reliant on employers making a matched contribution to the employee equivalent to the Government’s contribution. 

Impact of the Job Retention Bonus (JRR) 

Employers may be able to claim a one off £1,000 grant at the end of January 2021 for every previously furloughed employee they retain. 

This means that employers will be able to offset some or all of the costs associated with the JSS via the JRB. 

Example – an employee earning £18,000 a year working 50% of their time   

(for simplicity, we’ve excluded pension and NI costs)

The total cost to the employer for unproductive time is £750 (3 x the additional monthly payment). However, they will be able to claim £1,000 JRB at the end of January so are, in effect, £250 better off having retained the employee. 

The Problem with the JSS 

On straight cost terms, the JSS disincentivises employers to spread work across as many employees as possible. 

Example 1 – one full time employee vs 2 employees working half time 

Example 2 - one full time employee vs 3 employees working 1/3rd time each 

However, for each employee still in employment at the end of January the employer can claim the £1,000 JRB. Meaning in example 1 that retaining an additional employee costs £1,500 for November to the end of January of which £1,000 extra (£2,000 in total) is recoverable. In example 2, the additional cost is £2,925 (3x£975) of which £2,000 extra (£3,000 in total) is recoverable. 

Negotiating Points with Employers

The Job Retention Scheme offers financial incentives to employers to not make employees redundant. On straight cost terms it may not be viewed as generous enough by some employers to keep employees on.  

The following points may be useful: 

  1. The Job Retention Bonus pays out at the end of January if employees are still in work and can offset some if not all of the additional cost to employers. 

  1. There are obviously up front costs with redundancy in terms of notice and redundancy pay. 

  1. Employers stand to lose their most experienced and most valuable employees in a redundancy situation as they are the ones most confident of gaining other work and therefor most likely to volunteer for severance. 

  1. Re-hiring in the future will carry its own costs of selection, training and settling in – retaining employees now avoids these costs – a quick internet search puts costs at anything from £3,000 per employee up to £30,000. 

  1. Employers risk worsening morale amongst remaining employees if they take the axe to other colleagues. 

  1. Employers also risk long term reputational damage if they fail to do the right thing by their existing, long-term, loyal employees. 

GMB has already published guidance for members about responding to redundancies and/or attempts to change terms and conditions - https://www.gmb.org.uk/saving-jobs-hub/employer-talking-about-redundancies 

The JSS is only one of a number of economic assistance measures available to employers. We need to ensure that they have explored all other options – details in the Winter Economy Plan - https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/921059/CCS207_CCS0920237970-001_Winter_Economy_Plan_Web_Accessible.pdf 

This includes: 

  • Extension to VAT reductions for some business 

  • Bounce Back Loan Scheme 

  • Coronavirus Business Interruption Loan Scheme (CBILS) 

  • Coronavirus Large Business Interruption Loan Scheme 

  • Future Fund 

  • Pay as you Grow 

  • CBILS loan extension 

  • VAT deferral 

What the Government Should Do to Improve the JSS

The Resolution Foundation estimates that the maximum cost of the JSS will be £4.2bn over it’s six month duration (https://www.resolutionfoundation.org/publications/the-winter-economy-plan-is-coming/). This same amount would be contributed by employers in terms of unproductive work. 

This maximum total cost of £4.2bn compares with the cost of the banker’s bailout in 2008 of £27bn. 

It is essential that employers are incentivised to keep as many employees in continued employment as possible. Scrapping the employer contribution of 1/3rd of the unproductive time would mean that every employer can keep on 3 employees for the cost of 1 employee. 

Employers retain experienced and invaluable employees and employees in turn maintain the dignity of continued employment. 

At the same time, other Government measures around retraining and reskilling are equally essential. 

 
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