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Job Support Scheme - What You Need to Know

With the nation facing new coronavirus restrictions and the prospect of lower demand over the winter months, chancellor Rishi Sunak has laid out new emergency plans to protect workers and businesses.
 

These plans include a new Job Support Scheme to replace furlough, help for the self employed, business loans and VAT cuts.


Job Support Scheme
 

  • The Furlough Scheme ends on 31 October 2020. The new Job Support Scheme will run for six months from 1 November 2020 - 30 April 2021.
  • Designed to protect viable jobs in businesses who are facing lower demand and to help keep employees attached to the workforce. The Scheme will give employers the option to have their employees in work on shorter hours rather than make them redundant.
  • The government will subsidise the pay of employees who are working fewer than normal hours due to lower demand.
  • Employees must work at least a third of their normal hours.
  • Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
  • The Scheme is open to all employees even if they were not previously furloughed.
  • As soon as HMRC publish more detailed guidance we will share this with you.


Employers
 

  • Employees will have to work at least one third (33%) of their normal hours.
  • For the hours worked, employees must be paid their normal contracted wage.
  • For the hours not worked, employees must be paid their normal contracted wage. This wage cost will be split between the employer and the government as follows:
    • The employer will pay one third AND
    • The government will pay one third up to a cap of £697.92 per month.
    • The employee will forego one third of their wages for the hours not worked.
  • It means someone working a third of their hours would receive 77% of their pay.
  • It means the government will pay a maximum of 22% of someone's wages, down from 80% at the start of the furlough policy.
  • 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.
  • It will be open to employers across the UK with a UK bank account and UK PAYE Schemes even if they have not previously used the furlough scheme.
  • 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.
  • All small and medium sized businesses will be eligible for the scheme.
  • Larger business will have to meet a financial assessment test to be eligible if their turnover has fallen during the crisis.
  • HR:4UK clients will shortly be able to access a range of template letters for short-time working for the Job Support Scheme through their eConnect system and we will let you know once these are available. In the meantime, if you need further guidance and support our Advisors are here to help you.


Employees
 

  • Employees must be on an employer's PAYE payroll on or before 23 September 2020. RTI must have been made on or before 23 September 2020.
  • For the first 3 months of the Scheme employees must work at least 33% of their usual hours. After 3 months, the government will consider whether to increase this minimum hours threshold.
  • Employees can be cycled on and off the scheme and do not have to work the same pattern each month, but each short-time working must cover a minimum period of 7 days.


How is the Grant Paid?
 

  • Grant payments are made in arrears, reimbursing the employer for Government's contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
  • Usual wages calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme (CJRS).
  • Employees previously on furlough will receive pay based on their usual wages not the amount they were paid whilst on furlough.
  • Employers will be able to make their first claims online through the HMRC portal from December 2020. They will be paid 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. Grants can only be used as reimbursement for wage costs actually incurred.

Example 1
 

For someone on £2,000 a month working 50% hours, they would get £1,000 normal pay plus £333 extra from their employer and £333 from the government.

Example 2

Employee A normally works 5 days a week and earns £350 a week.

Employee A's company is suffering reduced sales due to coronavirus. Rather than making Employee A redundant, the company puts Employee A on the Job Support Scheme, working 2 days a week (40% of her usual hours).

The company pays Employee A £140 for the days worked.

For the time not worked (3 days or 60%, worth £210), Employee A will also earn 2/3 or £140 brining her total earnings to £280, 80% of their normal wage.

The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of their normal wages) to Employee A's company to help support them to keep Employee A's job.

Hours Employee Worked                   33%       40%       50%      60%     70%
Hours Employee Not Working             67%       60%       50%       40%     30%
Employee Earning (% of normal)     78%       80%       83%      87%     90%
Gov Grant (% of normal wages)           22%       20%       17%      13%      10%
Employer Cost (% normal wages)    55%       60%       67%      73%     80%
 

VAT Cuts

The chancellor has announced an extension of the temporary VAT cut for the hospitality and tourism sectors, some of the worst-hit by the pandemic, from 20% to 5%, and that this will remain in place until 31 March 2021, rather than 13 January 2021.

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