Rishi Sunak announced the New Job Support Scheme yesterday, which will essentially replace the furlough scheme, when this comes to an end on the 31st October. So, what is it and how will it work?
What is the aim of the Job Support Scheme?
- The scheme has been designed to protect jobs and assist employers who have and may continue to see a lower demand for their products/services that they provide during the winter as a result of Covid-19;
How will it work?
- Employers will pay their employees’ wages for the hours that they work;
- The government will pay 1/3 of the employee’s wages for the hours not worked subject to a cap with the employer paying a further 1/3;
- The aim is to ensure that the employee earns a minimum of 77% of their normal wages each month.
When does it start?
- The scheme will run for 6 months from 1st November 2020.
What are the eligibility criteria?
- All employers who have a UK bank account and use the PAYE scheme can claim;
- The employer or employee does not have to have used the furlough scheme to qualify;
- Small and medium businesses do not have to undergo a financial assessment;
- Large businesses will have to undergo a financial assessment and will have to prove that their turnover has reduced as a result of covid-19;
- To qualify, employees will need to be on their employers PAYE system on or before the 23rd September 2020;
- Each period of short-term working will need to cover a period of 7 days and the employees will have the ability to cycle on and off the scheme and do not have to work the same hours or working pattern each month;
- The employee must work at east 33% of their normal hours.
- It is only open to those employees who are in “viable jobs” so those working in industries that remain closed, may lose out.
How does the grant work?
- For any hours that the employee does not work, the Government and employer will contribute a third of the employee’s usual wage for those hours;
- The Government’s contribution will be capped at £679.92 per month;
- The Employer will remain liable for paying NIC and pension contributions and the payments will be made in arrears;
- Employees can’t be made redundant or be put on notice during the period which their employer is claiming the grant for their employees.
A practical example
So, if an employee earns £2000 per month and works 50% of their normal hours, they will be paid £1000 for the hours worked. They will then receive £333 from the government and a further £333 from their employer, thus receiving a total of £1666.
How can employers make claims?
- When the scheme opens in November, employers will be able to make a claim using an online system through the government website from December 2020;
- The payments will be made on a monthly basis;
- Grants will be made in arrears so a claim can only be made for a given pay period and only after the employee has been made and that payment has been made reported to HMRC via RTI return.
How will HMRC check?
- HMRC will be making checks and they will have the ability to withhold payments or employers may need to pay back money if the claim is deemed to be fraudulent or based on incorrect information;
- Employers need to ensure that they agree the short-term working arrangements with their employees and make any changes to the contract of employment in writing and they must notify the employee. HMRC may ask for this information and this information must be available should they request it.
If you need help making sense of the new scheme, please do not hesitate to contact Guardian. Call us on 0115 870 0150 or email us at support@guardianlaw.co.uk.