Updated: 23 October 2020
New announcements regarding the Job Support Scheme
The Government announced on 22 October 2020 that it will increase the scale of support available to employers through the Job Support Scheme above what was initially announced, in order to protect more jobs.
The minimum hours required for employees to work has dropped from 33% to 20% and the employer contribution for non-worked hours has dropped from 1/3 to 5%.
The scheme will run for six months from 1 November 2020 and this increased support for employers will be reviewed in the new year.
The Chancellor announced the introduction of a new Job Support Scheme to replace the current Job Retention Scheme, which ends on 31st October 2020. The information below has been updated following the Chancellor's updates on 22 October and we've highlighted the key changes for clarity.
The Job Support Scheme is designed to protect jobs in businesses who can operate safely but are facing lower demand over the winter months due to Covid-19. The scheme enables these businesses to retain employees on shorter hours, preserving valuable employment matches and protecting incomes.
The employee will have to work a minimum of 20% of their normal hours and the employer will continue to pay them as normal.
For the remaining hours not worked, the Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing 5% of non-worked hours up to a cap of £125 per month. These caps are based on a monthly salary of £3,125. This will ensure employees earn a minimum of at least 73% of their normal wages, where their usual wages do not exceed this salary.
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Further guidance will be published shortly.
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 (CJRS).
Large employers (with 250 or more employees) will have to meet a financial impact test, so the scheme is only available to those whose turnover has stayed level or is lower now than before experiencing difficulties from Covid-19. There will be no financial impact 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.
Employers must have agreed the temporary working arrangement for shorter hours in writing with employees (or union).
Employees must be on an employer’s PAYE payroll between 6 April 2019 to 23 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.
The employee must work at least 20% of their usual hours.
Staff on any type of contract are eligible, including those on variable or zero hours and agency workers.
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 consecutive days.
What the Grant Covers
The grant must be used to pay the employee. For every hour not worked by the employee, they will be paid a total of two-thirds of the usual hourly wage for that employee, up to a cap.
Employers will pay 5% of non-worked hours, capped at £125 per month, and NICs and automatic enrolment pension contributions in full as a contribution. Employers can top up employee’s wages above the 5% contribution at their own discretion.
The Government will contribute 61.67% of non-worked hours, capped at £1,541.75 per month.
When combined with the minimum hours requirement, this means that employees on the scheme will receive at least 73% of their wages, where their usual wages do not exceed the reference salary of £3,125 per 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.
What are "Reduced Hours"?
The employee must be working at least 20% of their usual hours.
For the time worked, employees must be paid their normal contracted wage.
For time not worked, the employee will be paid up to two-thirds of their usual wage.
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.
The scheme will be open from 1 November 2020 to the end of April 2021.
Employers will be able to make a claim online through gov.uk from 8 December 2020. They will be paid on a monthly basis.
Grants will be payable 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.
HMRC will check claims. 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.
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.
HMRC intend to publish the names of employers who have used the scheme. The public can report fraud to HMRC if they have evidence to suggest an employer is abusing the scheme.
Employees will be able to check if their employer has made a claim relating to them via their Personal Tax Account (sign up on GOV.UK).
Updated as per the changes announced on 22 October 2020.
An employee normally works 5 days a week earning £1,400 per month. The employer puts the employee on the Job Support Scheme, working 20% of usual hours:
The employer pays £280 per week for these hours.
For the time not working (80%), the employee will earn 66.67% of that time. The total earned is 73%, equal to £1,027.
The Government will give a grant worth £691 (61.67% of hours not worked) to his employer to support them in keeping his job, and his employer will pay a further £56 for hours not worked (5% of wages).
In addition, the employer will cover the Employer NICs and auto enrolment pension contribution on the payment (£56).
His employer may also be eligible for the Job Retention Bonus worth £1,000, this would cover 94.6% of the employer’s total costs for retaining the employee on the JSS between November and January.
We will update this information when more details are published by the government. If you have any questions in the meantime please contact us on 01722 325833 or email email@example.com.