New Job Support Scheme announced
The Government has announced a new Job Support Scheme, which will support the wages of people in work. The scheme will give employers the option of keeping employees in a job on shorter hours, rather than making them redundant.
This scheme will replace the Coronavirus Job Retention Scheme (CJRS) which ends on 31 October 2020. A factsheet has been published setting out further details of the new scheme. So, what do we know so far?
Job Support Scheme – key details
The scheme is designed to protect viable jobs in businesses that are facing lower demand over the winter months due to coronavirus.
Which employees are eligible?
Anyone who is employed on an employer’s PAYE payroll on or before 23 September 2020 is eligible.
Employees must work at least a third of their normal hours for the first three months of the scheme. After three months, the Government may increase this minimum threshold. The employee will be paid for that work as normal by their employer.
The employee does not have to work the same pattern each week and can cycle on and off the scheme, but each short-time working arrangement must cover a minimum period of seven days.
Employees are eligible even if they have never been furloughed.
Which employers are eligible?
All small and medium sized businesses are eligible to apply. There will be no financial assessment test for those businesses.
Larger businesses are only eligible to apply where their turnover has fallen. They will have to meet a financial assessment test.
Businesses are eligible even if they have not previously used the furlough scheme.
How does the grant work?
The employer will pay the employee as normal for the hours worked.
The Government, together with the employer, will cover two thirds of the pay the employees have lost by reducing their working hours.
The Government will pay a third of hours not worked. The level of grant will be calculated based on the employee’s usual salary, capped at £697.92 a month. The employer will pay a third of hours not worked.
This will ensure that employees earn a minimum of 77% of their normal wages, subject to the Government contribution cap.
The employer will pay Class 1 employer National Insurance Contributions and pension contributions.
“Usual wages” calculations will follow a similar methodology as for the CJRS.
Can the employer top up the employee’s wages?
This is not clear. The factsheet states “Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.” It is not clear whether this means that the employer will not be allowed to top up the employee’s pay; or that employers can top up the wages but the Government anticipates that employers who use the scheme will not be in a financial position to do so.
Is the employee’s agreement necessary?
Yes. The factsheet states that employers must agree the new short-time working arrangements with their staff, make changes by agreement, and notify the employee in writing. This agreement must be available to HMRC on request.
How to claim
Employers will be able to claim online from December 2020 and will be paid on a monthly basis. The grant will be paid in arrears, after payment to the employee has been made.
Interplay with redundancy
Employees cannot be made redundant or put on notice of redundancy during the period within which the employer is claiming the grant for that employee. We assume that this is because the aim of the scheme is to support viable jobs as an alternative to redundancy.
This is in contrast with the provisions of the CJRS, which ends on 31 October 2020.
Interplay with the Job Retention Bonus
Employers retaining staff who were furloughed can claim under both the Job Support Scheme and the Job Retention Bonus (if they are eligible).
How long will the scheme run for?
The current Job Retention Scheme will end on 31 October 2020. The new Job Support Scheme will run from 1 November 2020 for six months to April 2021.
The aim of the scheme is to protect viable jobs; to target firms that need support; and to incentivise employers to bring back previously furloughed employees.
Unfortunately, the scheme may not be a viable option for some employers. In contrast with the CJRS, under the Job Support Scheme there must be enough work to keep the employee working for at least a third of their normal working hours. If there is not, unfortunately redundancy may be the only option once the CJRS ends. However, the Government has announced that the Job Support Scheme will be expanded to protect jobs and support businesses required to close their doors as a result of coronavirus restrictions. For further information on this expansion of the scheme, please see our separate post here.
Where reduced work is available, the employer will be paying a minimum of 55% of the employee’s wages, plus pension contributions and NIC, for the employee to carry out 33% of their work. Some employers may be considering whether this is financially viable. An alternative may be to agree short time working with the employee outside the scope of the scheme instead.
We expect further guidance to be published shortly.
Originally posted 24 September 2020. Updated 14 October 2020.
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