The chancellor has announced a raft of new measures to support businesses in dealing with the impact of the Coronavirus pandemic. For employers, the most notable is the new Job Support Scheme, which will replace the existing Job Retention Scheme (furlough) at the end of October.
What is the Job Support Scheme?
It has been launched to directly support the wages of people in work, giving businesses the option of keeping employees in a job on shorter hours rather than making them redundant.
- The scheme will support viable jobs so employees must be working at least a third of their normal hours and be paid for that work, as normal, by their employer.
- The government, together with employers, will increase those people’s wages covering 2/3 of the pay they have lost by reducing their working hours.
- Running November to April, all small & medium sized businesses are eligible to apply. But larger businesses only when their turnover has fallen. Businesses are eligible even if they have not previously used the furlough scheme.
- Employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus.
- The level of grant will be calculated based on the worker’s usual salary, capped at £697.92 per month.
Ahead of the guidance, the government has published a fact sheet with more detail which answers the following questions:
- Does it cover NI & pension contributions? The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
- Can employers top up as with furlough payments? Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
- How long does an employee have to be have been on the payroll? Employees must be on an employer’s PAYE payroll on or before 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.
- Can you use the Job Support Scheme flexibly? 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.
- How is it calculated? 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.
- What about redundancy? 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.
- When does the Job Support Scheme open? 1 November and we anticipate it will be via the same platform used to claim furlough payments.
This scheme involves reducing employees’ pay and therefore will need documentation which we can provide. Please talk to our team and we can help.
Other measures announced include:
- Tax cuts and deferrals – extending the temporary 15% VAT cut for the tourism and hospitality sectors to the end of March next year.
- Loan flexibility – the burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system.
- Self-employed income support scheme (SEISS) – extended until 30 April 2021 and will cover three months’ of profits for the period from November to January 2021. It will cover 20% of average monthly profits, up to a total of £1,875
See the full package of measures here.