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Urgent comment following Chancellor’s Job Support Scheme extension

The amendments to the Job Support Scheme will be welcomed by businesses forced to shut by law, but they have not offered any comfort to businesses in supply chain or ancillary businesses, says Richard Churchill.

Whilst the amendments to the Job Support Scheme will be welcome relief for those employed by businesses who are forced to shut by law, the measures have not offered any comfort to those employed by businesses in the supply chain or ancillary businesses to those forced to shut. They are also going to be adversely impacted by the likely stricter lockdown measures. The owners of such businesses will still be faced with very difficult decisions in relation to retention of employees with the increased business costs under the Job Support Scheme commencing 1 November 2020.

Even for businesses who are eligible for the enhanced Job Support Scheme, cash flow may well remain a limiting factor in respect of their viability. The Job Support Scheme operates via a retrospective claim made following payroll submissions, i.e. amounts in respect of November salary costs will be claimed and paid in December. It appears the first announcements of closure are coming from Monday and therefore eligible businesses will still need to cash flow November salary costs before reclaiming them.

Closed-down businesses will still be liable for additional staff costs. The Job Support Scheme does not cover other contractual benefits, redundancy liabilities will continue to accrue, and there will be additional holiday being accrued over the period of closedown. These accruing costs may force those businesses with no cash to close in any advent even if the lockdown restrictions are eased.

Would you like to know more?

If you would like to discuss any of the above guidance, please contact Richard Churchill or your usual Blick Rothenberg contact.

For any press queries, please contact David Barzilay whose details are to the right.