It is well known that the Government furlough scheme is tapering down and finishes at the end of October 2020. We now have details of it’s replacement, the “Job Support Scheme”. A fact sheet from HM Treasury tells us how the scheme will work and here are the outline details:
- It will run for 6 months from 1 November 2020.
- All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
- It applies to employees who were on their employer’s PAYE payroll on or before 23 September 2020.
- 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). The expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance
- In the first three months of the scheme, an employee has to work at least 33% of their usual hours. After three months, the Government will consider whether they will increase this threshold. Employees will be able to “cycle on and off the scheme” and will not have to work the same pattern each month, but each short-time working arrangement must cover at least seven days.
- What does the grant cover? For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month. Grant payments will be made in arrears, reimbursing the employer for the 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. Full details will be set out in guidance shortly. Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on
furlough. Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked.
- The fact sheet says: “our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense”. We expect further guidance on this.
- Employees cannot be made redundant or given notice of redundancy during the period for which their employer is claiming the grant for them.
- 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.
We expect further guidance on the scheme soon and will provide a further update in due course. If you have any queries or questions on the scheme please contact Rob Tice on firstname.lastname@example.org.