Job Support SchemeBack to News
The current Coronavirus Job Retention Scheme (Flexible Furlough) is ending on 31 October 2020. The scheme will be replaced by the new Job Support Scheme, which is starting on 1 November 2020 and will run for six months to the 30 April 2021.
The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce.
Employers who use this new scheme will still be able to claim the Job Retention Bonus in January 2021, if they continue to meet the eligibility criteria.
The business will continue to pay employees for the hours worked, but the cost of the hours not worked will be split between the employer, the Government and the employee.
The employer will pay 5% of the average hours not worked, the Government will pay 62% of the average hours not worked, via a grant claim, and the employee will effectively waive the remaining 33% of the average hours not worked, as these will not be paid. This will ensure that an employee will continue to earn a minimum of 74% of their normal wages, subject to a Government contribution cap.
Employers’ Eligibility for the Job Support Scheme
- All employers who wish to use the scheme must have a UK bank account and a UK PAYE scheme.
- Employers and employees do not need to have used the previous Job Retention Scheme to be eligible.
- The scheme is open to all small and medium sized business.
- The scheme is open to all large sized businesses, subject to a financial assessment test. This will involve demonstrating that the businesses turnover is lower now than before Covid-19, also capital distributions such as dividends or share buybacks are not expected to be made whilst part of this scheme.
Employees’ Eligibility for the Job Support Scheme
- Employees must have been on an employer’s PAYE payroll on or before 23 September 2020, this is defined as a Real Time Information (RTI) submission being made to HMRC on or before 23 September 2020 (for salaried employees this is most likely to be the August payroll or for weekly employees the last week ending seven days before 23 September 2020).
- To qualify for the scheme employee’s must work at least 20% of their usual average hours (the guidance on how the employees’ average hours will be calculated is still to be released by the Government, but will be based on their full pay, not previous furlough pay).
- Employees will be able to be put on and taken off the scheme during the six month period of operation, however each short-time working arrangement, i.e. each period they are on the Job Retention Scheme, must be a minimum period of seven days.
- The employee must work at least 20% of their usual hours.
- For the time worked employees must be paid at their normal contracted rate.For the time not worked, the employee will be paid up to two thirds of their usual average wage.
- Employees cannot be made redundant or put on notice of redundancy during the period in which they are enrolled in the Job Support Scheme.
- The claim is only for 62% of unworked average wages, employers are expected to pay the associated Er’s NIC and Er’s Pension contributions on the same basis as the current Job Retention Scheme.
- For every employee that an employer wishes to put on to the Job Support Scheme, the employer must agree the new short-time working arrangements with the employee and amend their employment contract accordingly and then they must confirm this in writing to the employee (Lancaster Haskins highly recommend liaising with your HR department or external HR provider to ensure correct compliance in this area). These written agreements must be made available to HMRC on request.
- HMRC will check claims and can withhold or reclaim any grants found to fraudulent or based on incorrect information. The grants can only be used to reimburse businesses for wage costs actually incurred.
- HMRC intends to inform all employees who have been enrolled in the Job Support Scheme and inform them of the full details of their claim, either directly or through a website where employees can check businesses who have registered for the scheme.
How To Claim
The scheme will be open from 1 November 2020 to 30 April 2021. Claims can start to be made from early December and will be paid on a monthly basis, in arrears (no claim can be made for a pay period until the related RTI submission has been received by HMRC). Claims will be made through a new Job Support Scheme portal through Gov.uk (no further guidance on how and when registering for the new portal will commence has been released at present).
Below is an example calculation to demonstrate how the scheme will work;
Beth normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).
Her employer pays Beth £140 for the days she works.
And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.
The Government will give a grant worth £130 (62% of hours not worked, equivalent to 37% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.
Hours Employee Worked 20% 40% 50% 60% 70%
Hours Employee Not Working 80% 60% 50% 40% 30%
Employee Earnings (% of normal) 74% 80% 84% 87% 90%
Gov’t Grant (% of normal wages) 50% 37% 31% 25% 19%
Employer Cost (% normal wages) 24% 43% 53% 62% 71%
This is an overview of the current position of the Job Support Scheme. We will update this summary as and when the Government release more detailed guidance.