Job Support Scheme

The Chancellor, Rishi Sunak, today unveiled his winter economy plan, which sets out the next phase of Government support as a result of the ongoing Covid-19 pandemic.

This blog discusses our initial understanding of the new Job Support Scheme, which will be introduced on 1 November 2020 to replace the Coronavirus Job Retention Scheme (or ‘furlough scheme’).  The scheme aims to protect viable jobs in businesses which are facing lower demand over the winter months due to the pandemic.

The Government have produced some initial guidance on the new scheme, which can be found here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/921389/Job_Support_Scheme_Factsheet.pdf

The key points are as follows:

• The new scheme will run from 1 November 2020 to 30 April 2021 and will partly subsidise salary costs, but only for employees who are not required to work their usual hours. The grant is not extended to include employer’s National Insurance and pension costs.

• Eligibility is automatic for Small and Medium Enterprises, which broadly means having less than 250 employees. We expect any connected companies to be included in this test.

• Larger businesses will be required to prove that they have been adversely affected to qualify for the grant. Furthermore, they should not pay any dividends whilst claiming under the scheme.

• Employees do not have to have been furloughed previously but must have been included on a Real Time Information (RTI) submission lodged by midnight on 23 September 2020.

• The employees must work and be paid in full by the employer for one third of their “usual hours” for the first 3 months. The Government will consider whether to increase this minimum hours threshold at the end of the initial 3 month period.  The definition of “usual hours” has not yet been clarified, but it is expected to broadly follow the calculation used in the furlough scheme

• For the time that the employee is not working they will also earn two-thirds of their normal wage. The Government will give a grant worth one-third of hours not worked with the employer required to match the Government contribution.

The table below demonstrates the percentage contributions required by both the Government and the employer based on various scenarios:

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

 

• 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.

• 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.

• The grant will be reimbursed in arrears and is capped at a maximum of £697.92 per employee per month. November monthly claims are likely to be paid around the end of December.

• It will only be possible to submit one monthly claim regardless of the pay frequency and HMRC have advised that they will check claims made.

• Further guidance is expected to be provided on the reference period for wages and hours.

• Short time working agreements must be made in writing in the same way as furlough agreements.

We will issue further information when additional guidance is released by the Government.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.

Photo by Vanna Phon on Unsplash