The Job support Scheme will replace the currently running Furlough Scheme. The Government has released further plans to offer continued support the nation during the current Coronavirus pandemic.
Job Support Scheme
HM Treasury has published a factsheet setting out the details of the Job Support Scheme, as announced in the Chancellor’s Winter Economy Plan.
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. The scheme will open on 1 November 2020 and run for six months.
The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Who is eligible for the Job Support Scheme?
- All employers with a UK bank account and UK PAYE schemes can claim the grant.
- Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
- Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).
- Employees must be on an employer’s PAYE payroll on or before 23 September
- In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.
- Employees will be able to cycle on and off the scheme and do 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 is covered in the grant?
• 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, reimbursing the employer for the
Government’s contribution. The grant will not cover Class 1 employer NICs or
pension contributions, although these contributions will remain payable by the
• “Usual wages” calculations will follow a similar methodology as for the Coronavirus
Job Retention Scheme. Full details will be set out in 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
• Employers must pay employees their contracted wages for hours worked, and the
Government and employer contributions for hours not worked.
The Governments expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
Employees 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 time not worked, the employee 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 to claim
The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December and will be paid on a monthly basis
Grants will be payable in arrears meaning that a claim can only be submitted in
respect of a given pay period, after payment to the employee has been made and
that payment has been reported to HMRC via an RTI return.
HMRC Compliance checks
- HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred.
- Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
The intention is that the employee will be informed by HMRC directly of full details of the claim.
For further advice contact AJR & Co Ltd.