The introduction of the Coronavirus Job Retention Scheme (CJRS) in March 2020 enabled employers to claim Government support for 80% of their staff’s wages, up to a limit of £2,500 per month per head, as well as employer National Insurance contributions and pension contributions based on staff’s furloughed pay (albeit with support on pension contributions limited to the statutory minimum auto-enrolment amount of 3% of qualifying earnings).

From 1 July, key changes to the CJRS were phased in, with flexible furlough enabling employees to return to work on a part-time basis, followed by employers assuming responsibility for paying employer’s national insurance and pension contributions and ultimately meeting the cost of a portion of the furlough pay.

Now, as the end of October looms and brings the CJRS to a close, employers can expect another shift in the financial support they receive from the Government.

The Job Support Scheme

On 24 September, Chancellor Rishi Sunak announced the Job Support Scheme (JSS). The JSS will take effect from 1 November and run for six months.

As there are roughly 9.6 million people still relying on the CJRS at the time of writing, engagement with the JSS is expected to be high from the very beginning.

By introducing the JSS, the Chancellor hopes that employers will give their staff the option of working fewer hours as opposed to being made redundant.

Under the new scheme, employees will be required to work at least one third (33%) of their contracted hours. For every hour not worked, the Government and the employer will then each pay one third of employees’ usual pay, with the Government’s contribution capped at £697.92 per month. This means that, if employees work 33% of their hours, they will receive at least 77% of their normal pay (assuming the Government contribution has not been capped).

All small and medium-sized businesses will be given the option of using the JSS. Large businesses may also be granted an opportunity to use the scheme, if their turnover has been demonstrably affected by the pandemic.

What does this mean for workplace pension schemes?

Although the Government will be funding a percentage of employees’ wages, as mentioned above this funding will not extend to pension contributions. Consequently, employers will be wholly responsible for paying pension contributions in relation to the 77% received by affected staff.

Pension contributions for workers affected by the JSS will continue to fall under current auto-enrolment legislation, with the aim of ensuring that employees do not miss out on valuable opportunities for long-term saving as the pandemic continues.

Although the full financial implications of this change for businesses may as yet be unclear, at Punter Southall Aspire we continue to monitor the latest developments. We will keep you updated on any legislative changes that arise and how they may affect your business.

In the meantime, if you are unsure of how the JSS will impact your staff’s long-term savings plans, please contact your usual Punter Southall Aspire consultant.