October 24, 2020

The Latest News from across the UK

Rishi Sunak’s New Job Support Scheme – Will Clayton of Constantine Law Asks If the Chancellor is Taking a Gamble?

Chancellor, Rishi Sunak confirmed to parliament just before noon today that the Coronavirus Job Retention Scheme (CJRS) will end on 31 October 2020.

In so doing, he dispelled rumours which have circulated all week that the government would extend CJRS in the wake of the recently tightened national Covid19 lockdown measures.

Glibly, Mr. Sunak explained his rationale; he sees no point in providing further funding to maintain jobs which, were it not for the artificial support of the CJRS, would no longer be sustainable.

Whether you agree with the chancellor or not, few employers will appreciate the timing of his announcement as  those affected by this news are left with precious little time to follow the required consultation processes to lawfully implement the inevitable redundancies.

Certainly, for employers who may need to let 20 or more employees go at the end of October, time is extremely tight but if they start now they might just complete the process in time. However, for employers who may need to shed 100 or more currently furloughed employees, unless they have already started collective consultation with employee representatives, they  will not be able to lawfully serve notices to dismiss until around mid-November at the earliest.

So, what of the Chancellor’s successor to the CJRS, the “Job Support Scheme”?   Fellow employment lawyers and HR professionals await the inevitable detailed government guidance with baited breath because  Mr Sunak gave very little information away in his speech about how the scheme will work in practice.

Nevertheless, IF I have understood the Chancellor correctly, the JSS will work something like this:

  • The scheme will support the wage costs of employers who need to put employees on “short time working”.  A part-time furlough scheme, if you like.
  • Employees must work at least 33% of their standard weekly working hours for which, of course, the employer will be expected to pay the employee in full.
  • Of the hours that will be lost by the employee during each week of the continued Covid19 restrictions, the employer and the government will share 66% of those costs equally, leaving the employee having to take the other 33% of lost hours “on the chin”.

Confused? You are in good company.

To be fair to Mr Sunak, at the heart of his Job Support Scheme, must lie a genuine desire to save peoples jobs in businesses where the demand for working hours has diminished.  The obvious example being the leisure hospitality sector affected by reduced covers  and  early closing times.

However, my first impression of the Job Support Scheme is that Mr Sunak appears to be taking a real gamble, he appears to be  betting on employers choosing to prefer his ‘musketeer’ approach of asking all affected workers to volunteer for a shared cut in hours (and pay) over what others may see as the more conventional and commercial option of reducing the number of positions to meet the reduced demand for work to be done.

For example, will a restaurant that employs 9 waiting staff put all of them on 33% of their hours and volunteer to share the costs of covering 66% of the shortfall with the government.  Or will they instead make 6 members of staff redundant and keep three fully employed, without the costs of the JSS subsidy??  The Chancellor appears to be hoping that employers will make the altruistic choice. Some will, but many will not.

Will the JSS  be straightforward to implement?   This will depend on the precise wording of the affected employees’ contracts of employment.  For the vast majority of employers it will not be possible to change their employees’ hours and pay without their consent.  So no, not entirely straightforward.   To force the change without consent , risks legal claims for unlawful deductions from wages and constructive unfair dismissal.   Many employees will consent, of course, if the only other option is unemployment but the importance of obtaining consent should not be underestimated and ought to be confirmed in writing.”