Posted: 26 / 10 / 2020
Updated on 26th October 2020
The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The scheme will open on 1 November 2020 and run for 6 months.
The company will continue to pay its employee for time worked, but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job. The government’s contribution will be capped at £1,541.75.
Employees must work 20% of their normal working hours to be eligible. The Government will pay 61.67% of hours not worked up to a cap, with the employer contributing 5%. This will ensure employees earn a minimum of 73% of their normal wages, where the Government contribution has not been capped.
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
Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Who is eligible?
- 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.
- 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).
- Our 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.
- 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.
- In order to support viable jobs, for the first three months of the scheme the employee must work at least 20% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.
- 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.
Beth normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).
- Her employer pays Beth £140 for the days she works.
- And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.
- The Government will give a grant worth £130 (61.67% of hours not worked) to Beth’s employer to support them in keeping Beth’s job.
|Hours Employee Worked||20%||40%||50%||60%||70%|
|Hours Employee Not Working||80%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||73%||80%||83.5%||87%||90%|
|Gov’t Grant (% of normal wages)||49%||37%||31%||25%||10%|
|Employer Cost (% normal wages)||24%||43%||52.5%||62%||80%|
How do I apply
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.
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.
Job Support Scheme – Expansion for Closed Business Premises
On 9th October, the government announced an extension to the job support scheme, specifically for businesses that were required to close due to COVID restrictions. The key difference is that where a business does need to close, The government will support eligible businesses by paying two thirds of each employees’ salary, up to a maximum of £2,100 a month. Under the scheme, employers will not be required to contribute towards wages and only asked to cover NICS and pension contributions, a very small proportion of overall employment costs. As per the original job retention scheme, employers can top the 67% if they choose to.
To be eligible, employers must be instructed to and cease work for a minimum of 7 consecutive (or calendar) days.