Further to Chancellor Rishi Sunak’s announcement on 24th September 2020, the Chancellor outlined the government’s plan to protect and support businesses over the coming months as we continue to deal with the impact of the coronavirus pandemic.
The announcement has brought a sigh of relief for many businesses as a result of the Coronavirus Job Retention Scheme (CJRS) coming to an end on 31st October 2020.
To help businesses, we have put together some FAQs to help you understand the purpose of the Job Support Scheme. The government have also published a helpful factsheet providing a brief overview of the scheme to date.
What is the Job Support Scheme?
The Scheme will open on 1st November 2020 and run for 6 months, until April 2021.
The Chancellor announced that:
“The furlough policy was the right policy at the time…it provided immediate, short-term protection for millions…but as the economy reopens it is fundamentally wrong to hold people in jobs that only exist inside the furlough”.
The scheme is designed to protect viable jobs and is aimed at targeting support towards businesses that need it most.
Under the scheme, an employee will continue to be paid for the time worked. The cost of hours not worked will be split between the employer and the government.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus, if they meet the eligibility criteria.
What Does the Grant Cover?
For every hour not worked by the employee, both the government and employer will pay a third each of the usual hourly wage for that employee. The government contribution will be capped at £697.92 a month.
Grant payments will be made in arrears. The grant will not cover Class 1 employer NICs or pension contributions and will remain payable by the employer.
It is believed that the “usual wages” calculation will follow a similar methodology as for the CJRS. Full details will be set out in government guidance shortly.
Employees, who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
Who is Eligible for the Job Support Scheme?
Employers
All employers with a UK bank account and UK PAYE scheme can claim the grant. The employer does not need to have previously claimed the CJRS and there is no financial assessment test for SMEs.
Large businesses will have to meet a financial assessment test; the scheme will only be available to those large businesses whose turnover is lower now than before experiencing difficulties from Covid-19.
Employees
Employees must be on an employer’s PAYE payroll on or before 23rd September 2020.
The employee must work at least 33% of their usual hours. After the first 3 months of the scheme, the government will consider whether to increase the minimum hours’ threshold.
Employees will be able to cycle on and off the scheme. They will not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.
What Does it Mean to be on Reduced Hours?
- The employee must be working at least 33% of their usual hours.
- For the time worked, employees must be paid their normal contracted wage.
- For the time not worked, employees will be paid up to two-thirds of their usual wage.
- Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.
How Can I Claim?
The scheme will open from 1st November 2020 to the end of April 2021. Employers will be able to make a claim through the gov.uk website from December 2020. Payments will be paid in arrears on a monthly basis.
HMRC Checks
HMRC will check claims and payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. The intention is to ensure that HMRC are provided with the full details of the claim directly.
If you decide to use the Job Support Scheme and an employee will be working reduced hours. This must be agreed in writing by way of a change of terms letter detailing the temporary variation to their contract of employment.
Grants can only be used for reimbursement of wage costs actually incurred.
An Example: Putting the Plans into Practice
Sue normally works 5 days a week and earns £400 a week. The company she works for is suffering due to the downfall in customers as a result of coronavirus. Instead of making Sue redundant the company puts Sue on the Job Support Scheme, working 2 days a week (40% of her usual hours or £160).
Sue is not working 60% of her hours (£240) due to the impact of Covid-19. Under the Scheme, she will earn 2/3 (£160), bringing her total earnings to 80% of her normal wage (£320) .
The government will give a grant worth £80 (1/3 of hours not worked, equivalent to 20% of her normal wages).
|
Hours Employee Worked
|
33%
|
40%
|
50%
|
60%
|
70%
|
|
Hours Employee Not Working
|
67%
|
60%
|
50%
|
40%
|
30%
|
|
Employees Earnings (% of normal)
|
78%
|
80%
|
83%
|
87%
|
90%
|
|
Gov’t Grant (% of normal wages)
|
22%
|
20%
|
17%
|
13%
|
10%
|
|
Employer Cost (% normal wages)
|
55%
|
60%
|
67%
|
73%
|
80%
|
Want to Learn More?
We are currently waiting for further guidance to be published, which the government have stated will be released shortly; as soon as this guidance is published, we will endeavor to keep our clients updated.
We understand that for many businesses, this is a worrying time and you may not be in a position to pay 55% of your employees’ salaries for only 33% work. If you would like to discuss your options with our employment law team, please get in touch.
