New Job Support Scheme

Last week the government announced that The Job Retention Scheme, which ends 31st October, will be replaced by a new Job Support Scheme, that will last for six months in order to support viable jobs.

For the first three months of the new scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.

Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means that a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.

Also, employees must work a minimum of 1/3 of their normal hours, paid at their normal rate.

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.

The best was to explain it is to think of it as the cost is being split three ways;

a) Employer contributes 1/3 towards wages.
b) State contributes 1/3 towards wages – (up to capped limit)
c) Employee contributes 1/3 as unpaid wages.

Here is an example provided by the Government;

• Employee normally works 5 days a week and earns £350 a week. Their Employer is
suffering reduced sales due to coronavirus. Rather than making Employee redundant,
Employer puts Employee on the Job Support Scheme, working 2 days a week (40% of their
usual hours).
• Employer pays Employee £140 for the days they works.
• And for the time they are not working (3 days or 60%, worth £210), they will also earn
2/3, or £140, bringing their total earnings to £280, 80% of  their normal wage.
• The Government will give a grant worth £70 (1/3 of hours not worked, equivalent
to 20% of their normal wages) to Employer to support them in keeping Employee’s
job.

 

 

 

 

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.

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.

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 December 2020. They will be paid on a monthly basis.

The Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. This means 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.

All businesses can qualify, even if they didn’t use furlough, though large businesses must prove they’ve been financially hit by coronavirus.

The full details have yet to be released and we will provide updates once the government has released further guidance.

Source: https://www.gov.uk/government/publications/job-support-scheme