Lockdown 2 – What Does This Mean for Businesses, Furlough and the Job Support Scheme?

Year Published: 2020

On 31st October 2020, the Government announced that, despite localised tier systems being in place, new COVID-19 cases were on the rise again and therefore a new national lockdown restrictions (‘Lockdown 2’) will be put in place starting from 5th November 2020 until 2nd December 2020.

After 2nd December, the Government will conduct a review and, depending on the figures and R number at the time, it may look to return to the regional tier system.

What Does Lockdown 2 Mean for Businesses?

The main message of the lockdown is for people to stay at home. With regards to work, the guidance states that “everyone who can work effectively from home must do so”. Where this is not possible, they are permitted to attend work.

The key word here seems to be “effectively” and there is a lot of debate about how this should be interpreted. Certainly, some employees can physically work from home as they have the requisite hardware and software to do so, however they may not be able to do so effectively. Examples of this could be where this impacts seriously on their mental health or where they need to be in the office as they are not able to work without supervision.

Unfortunately, the Government has once again ordered certain businesses to close, those being:

  • All non-essential retail
  • Indoor and outdoor leisure facilities
  • Entertainment venues
  • Personal care facilities

Food shops, supermarkets, garden centres and certain other retailers providing essential goods and services can remain open.

Extension to the Job Retention Scheme (‘Furlough’)

It has been announced that the furlough scheme will remain available until December. This is a devastating blow to already fragile businesses just recovering from the last lockdown. Prior to announcing this, the Government’s Job Support Scheme (JSS) had been due to start on 1 November, however this has been postponed and instead, the Job Retention Scheme (JRS) has been extended to cover the period of Lockdown 2. Employees can receive 80% of their pay, with employers just paying the National Insurance and Pension contributions.

There is also no requirement for the employee or the employer to have registered with the JRS previously, which may be a help to businesses who may not have needed to furlough staff during the previous 6 months, but will need to do so during November.

The aim is that once the lockdown is hopefully eased on 2nd December, the JSS will then start to run.

Job Support Scheme

This new scheme will be slightly more targeted than its predecessor and is aimed at small and medium enterprises who need more time to recover but can still offer some work to their employees. The scheme will run for 6 months and all employers with a UK bank account and UK PAYE schemes can claim the grant. However, neither the employer nor the employee needs to have previously used the Job Retention Scheme to qualify for this scheme.

How Does the Job Support Scheme Work?

The employee must work at least 20% of their usual hours and the employer will continue to pay them as normal for the hours worked. Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government. The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish. The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month.

The scheme can be used flexibly and employees do not have to be working the same pattern each month, but each any short-time working arrangement must cover a minimum period of seven days.

What is JSS Closed?

The JSS Closed scheme will help support the wage costs of employees who have been instructed to cease work in eligible (closed) premises. Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish.

The Job Support Scheme grant will also not cover National Insurance contributions (NICs) or pension contributions. These contributions remain payable by the employer. Employers must deduct and pay to HMRC income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.

Employers and Employees must also continue to pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped saving into their pension.

The most notable point for employees is that they cannot be made redundant or put on notice during the period within which their employer is claiming the grant for that employee. Only time will tell if this scheme is enough to ensure the protection of jobs in the long term.

For further advice on the new measures in place for Lockdown 2, or for any Employment related matters, please contact Katie Hodson, Partner and Head of Employment, on 0161 475 7670 or email [email protected].

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