Rishi Sunak has unveiled a new Job Support Scheme which will replace the Coronavirus Job Retention Scheme (CJRS) (also known as the furlough scheme) when it ends on 31st October.
How will the Job Support Scheme operate?
The new scheme will be in place for six months from 1st November and aims to protect viable jobs in companies who are facing reduced demand due to the impact of Covid-19 over the winter months.
The Job Support Scheme will work on the following basis:
- Employees work a minimum of 33% of their normal working hours.
- For the remaining hours not worked, employers and the Government will each pay one third (22%) of the employees’ equivalent salary.
- The employee will therefore receive at least 77% of their normal working pay.
The level of wages paid will be calculated based on the employee’s usual salary, capped at £697.92 per month. It is believed that businesses will not be able to top up their employees’ pay at their own expense above the two thirds contribution to hours not worked.
Employers and employees have to both agree to the new short-term working arrangements, and the business will need to notify employees in writing of the arrangements and make any changes as appropriate to their employment contracts
Grant payments through the Job Support Scheme
The business will be reimbursed in arrears for the Government’s contribution. The grant payments the business will receive will not cover Class 1 employer National Insurance or pension contributions – these will still have to be paid by the employer.
The methodology used for calculating employee wages will be similar to that used for CJRS payments but further details on this will follow shortly.
Businesses will be able to claim via the Gov.uk website from December and claims will be paid on a monthly basis. All claims will be subject to HMRC checks, as they were with furlough leave claims.
Which employers are eligible to access the Job Support Scheme?
The Scheme will be available to companies who:
- Haven’t previously accessed the furlough scheme, as well as those who have;
- Businesses with a UK bank account and a PAYE scheme; and
- All Small and Medium-Sized Enterprises (SMEs). Large companies will have to undertake a financial assessment test and provide proof that their commercial operations have been severely impacted by the coronavirus in order to be eligible. The Government also expects that large businesses will not be making capital distributions (such as dividends or share buybacks) while accessing the Job Support Scheme.
Employers will still able to also claim the one-off Job Retention Bonus payment of £1,000 for formerly furloughed employees who remain in their job roles until at least February 2021.
Which employees are eligible to access the Job Support Scheme?
In order to use the Scheme, employees must:
- Be on an employer’s PAYE payroll on or before 23rd September 2020. This includes a Real Time Information (RTI) submission, notifying payment to an employee to HMRC being made on or prior to 23rd September 2020.
- Not have received notice of redundancy in order to be eligible.
For the initial three months of the Job Support Scheme, employees have to work at least 33% of their normal working hours. After three months, the Government may increase the minimum hour’s threshold.
Workers will be able to come on and off the Scheme and don’t have to work the same schedule of working hours each month. However, all short-time working arrangements have to cover a minimum period of seven days.
Further guidance on the Job Support Scheme is expected to be published shortly.
Self Employment Income Support Scheme (SEISS)
In addition to the Job Support Scheme, the Chancellor also confirmed during the Winter Economy Plan that the SEISS would be extended.
From November to January 2021, an initial taxable grant will be available which will pay 20% of average monthly profits of a self-employed person, up to a total amount of £1,875. The grant will be available to those who are currently eligible for the SEISS and are continuing to actively trade but face reduced demand due to Covid-19.
A further second grant will also be available for self-employed workers to cover February to the end of April 2021. Further details are to be confirmed.