Following the announcement about the new Job Support Scheme, we have prepared some preliminary questions and answers.
Last updated 22nd October 2020
The update on the 22nd October significantly changed the Job Support Scheme. To avoid confusion, we have removed the notes on the previous guidance.
Please see the government’s latest Policy Paper guidance for further information. This provides further details.
What is the Job Support Scheme?
The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce (and avoid redundancies).
How does it work?
Updated 22nd October: The Company will continue to pay its employee for actual time worked at their normal rate and they will have to work at least 20% (one fifth) of their normal hours (but can work more).
The burden of the hours NOT worked by the employee will be split between the Company, the government and the employee.
How does this split work in practice?
Updated 22nd October: For any hours NOT worked by the employee, the Company will pay 5%, the government will pay 61.67% and the employee will not be paid the remainder. This is to ensure that employees earn at least 73% of their normal wages (where their usual wages do not exceed the reference salary of £3,125 per month).
If someone works 37.5 hours per week, they will be required to work a minimum of one fifth of their hours i.e. 7.5 hours. They will be paid their normal wage for the 7.5 hours worked by the Company.
This will leave a remaining 30 hours not worked:
- The Company will pay 5% of the 30 hours i.e. 1.5 hours (capped at £125 per month)
- The government will pay 61.67% of these hours i.e. 18.5 hours (capped at £1,541.75 per month)
- There will be NO payment for the remaining 10 hours.
Example in monetary terms (from the Government Fact Sheet):
Andrew earns £1400 per month.
He works 20% and is paid 20% = £280 (this is paid by the employer)
The government pay 61.67% the remaining (£1400 - £280 = £1120) = £691
The company pay 5% of £1120 = £56.
The employee receives £1027.
Please also see the Government fact sheet for further examples in monetary value.
The Company will also be required to pay NICs and automatic enrolment pension contributions on the payment.
Can we change hours with employees?
Employees will be able to dip in and out of 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.
Is the government contribution capped and what can it cover?
Updated 22nd October: Yes, the government contribution is capped at £1,541.75 a month.
The grant can cover the usual hourly wage for the employee. It will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the Company.
Which employees can be claimed for?
Updated 22nd October: Any employees who were on the PAYE payroll between 6th April 2019 to 23:59 on 23rd September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
They do not need to have been on the Furlough Scheme previously.
They can undertake training in their working hours whilst being claimed for.
Staff on any type of contract are eligible, including those on variable or zero hours and agency workers.
How long is the scheme for?
Updated 22nd October: It will run from 1st November to until April 2021 (i.e. 6 months). The government have said there will be a review the amount of contribution in the new year.
When and how will payments be made?
Updated 22nd October: Grant payments will be made in arrears, meaning that 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 via an RTI return.
Employers will be able to make a claim online through Gov.uk from 8th December 2020 and they will be paid on a monthly basis.
Can employees be made redundant while claiming?
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.
You can action redundancies but cannot make a claim for those you make redundant (i.e. you cannot use the grant to pay notice periods).
Can the employer top up the third that is not paid to the employee?
Updated 22nd October: Employers can top up employee’s wages above the 5% contribution at their own discretion.
Can the Company / employer insist on employees reducing their hours?
Updated 22nd October: Employers must have agreed the temporary working arrangement for shorter hours in writing with employees (or union). Employers must 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.
Therefore, if you do not have a short time working clause in your contract already (or in the furlough agreement) you must consult with the employees to put an agreement in place. We recommend you start doing this now.
Can all businesses claim?
Updated 22nd October: Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19.
There will be no financial assessment test for small and medium enterprises (SMEs) and charities.
Fully publicly funded organisations are not expected to use the scheme, as has been the case with the CJRS, but partially publicly funded organisations are eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.
What about holiday during the Job Support Scheme?
Employees will continue to accrue holiday at their full rate while on short time working. If they request a week’s holiday and this is authorised, holiday should be paid at their normal weeks wage (not the amount being paid under the Job Support Scheme).
What about employees on a zero-hours contract?
The scheme is available staff on any type of contract, including those on variable or zero hours and agency workers.
Can I still claim for the Job Retention Bonus?
Yes, employers using the Job Support Scheme Open will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.