The Job Support Scheme: Further Government Financial Support for Employers

Job Support Scheme Postponed

Please note that the Job Support Scheme, which was due to commence on 1 November 2020, was postponed as a result of the government’s decision to extend the Coronavirus Job Retention Scheme until December.

On 24^th September 2020, Chancellor Rishi Sunak announced a new Job Support Scheme as part of further plans to protect UK businesses and workers beyond the 31^st October 2020 when the Coronavirus Job Retention Scheme (CJRS) ends.

What is the new Scheme?

From 1^st November 2020, the new Job Support Scheme will safeguard viable jobs where businesses see a decrease in demand over the winter period due to Covid-19. The Scheme will enable businesses to keep employees as part of the workforce where fewer working hours are required.

In summary, the Scheme will mean that:

• the employer will pay employees for hours worked; and
• for unworked hours, the employer and government will each pay one-third of the employee’s salary for those hours (with the employee forfeiting the remaining third). An employer is not expected (or perhaps not permitted) to top up pay to 100%.

This guarantees that an eligible employee will be in receipt of a minimum of 77% of their normal salary (up to a cap).

The Scheme will run for six months from 1^st November 2020 until 30^th April 2021 and is designed to work alongside the existing Jobs Retention Bonus (under which employers can still claim £1,000 for every employee who is brought back from furlough through to 31 January 2021).

Which employers are eligible under the Scheme?

• All employers with a UK bank account and UK PAYE schemes.
• Large businesses will have to meet a financial assessment test. A large business must have a lower turnover now than before experiencing difficulties from Covid-19.
• There will be no financial assessment test for small and medium enterprises.
• There will be no requirement that the employer previously used the Coronavirus Job Retention Scheme

Which employees will be eligible under the Scheme?

• Employees must be on an employer’s PAYE payroll on or before 23^rd September 2020 (a Real-Time Information submission notifying payment to that employee to HMRC must have been made on or before this date).
• There is no requirement that the employee previously used the Coronavirus Job Retention Scheme.
• For the first three months of the Scheme, the employee must work at least 33% of their usual hours. The government will re-assess this after 3 months.
• There is no requirement that an employee works the same pattern each month, however, each short-time working arrangement must cover a minimum period of seven days.
• Employees cannot be made redundant or be under notice of redundancy in any period for which there is a claim under the scheme.

What amount can be claimed?

Funds are available for hours not worked by employees. The amount contributed by the government will be calculated based on an employee’s ‘usual wages’, capped at a third of wages for those hours or £697.92 per month whichever is the lower. 

The calculation for ‘usual wages’ will be similar to the Coronavirus Job Retention Scheme.  For employees who have been furloughed, their original or underlying pay will be referenced and not furlough pay.

The government’s contributions will be made in arrears, reimbursing the employer each month. 

Employers will be responsible for:

• Class 1 employer NICs; and
• Pension contributions.

How do employers claim?

Employers will be able to make a claim through the government website from December 2020.

As funding is received in arrears, 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 by way of an RTI return.

The government has issued a helpful factsheet including examples of how the Scheme will work: Further guidance on how the Scheme will work will also be issued before November. 

Next steps for employers?

Employers will need to plan ahead of November and ensure that they have in place appropriate arrangements and documentation for those employees participating under the new Scheme.

This means:

• Current reorganisation plans may need to be revisited;
• Current furlough arrangements may need to be formally terminated;
• Potentially higher numbers of employees in the workplace may mean that changes need to be made to ensure a Covid-19 safe environment;
• New working arrangements and working hours under the scheme will need to be agreed, notified in writing and subject to review;
• New pay arrangements under the scheme will need to be agreed, notified in writing and subject to review (as the new scheme envisages a reduction in pay).

Importantly, it is a requirement of the Scheme that the new arrangements are notified in writing to the employee, and that the document is available to HMRC on request.

Employers are advised to monitor and keep up to date with details of the Scheme as further details are expected.  A separate support scheme will be put in place for the self-employed.  You can reach our Employment Team for further guidance on 0161 941 4000 or via email.