Job Support Scheme

The new Job Support Scheme will be introduced on 1 November 2020…

The Coronavirus Job Retention Scheme (CJRS) comes to an end on 31 October. As part of the Winter Economy Plan the UK Government announced is introducing a new Job Support Scheme which will run from 1 November 2020 until April 2021.

Any employers currently undergoing redundancy consultations should not ignore the announcement, given the duty on employers to explore all viable alternatives to redundancy for the process to be deemed fair.

The key highlights of the scheme are:

  • For employees to be eligible, they must have been included on a PAYE month end submission sent to HMRC by 23rd September. For many monthly paid employees, this is likely to mean they must have been on an August payroll.
  • There is no requirement for employers to have previously used the Job Retention Scheme.
  • Employees will need to work a minimum of 33% of their usual hours and be paid by their employer for this time, at their full rate of pay. Any employer wishing to reduce an employee's contractual hours will require the employee's written consent in order to be compliant with employment law and HMRC may request this documentation in the event of an audit.
  • For every hour not worked, the employer and the Government will each pay one third of the employee's usual pay.
  • The Government contribution will be capped at £697.92 per month.
  • The reduced working time arrangements need to last a minimum of seven days, but the working hours do not need to be fixed.
  • The employees must not be on notice of redundancy.

Where the Government contribution has not been capped, the effect of the Scheme is that employees will receive at least 77% of their pay. The table below illustrates some cost-sharing scenarios (assuming Government contributions are not capped) which are relatively complex:

Hours Employee Worked

33%

40%

50%

60%

70%

Hours Employee Not Working

67%

60%

50%

40%

30%

Employee Earnings (% of normal)

77%

80%

83%

87%

90%

Gov't Grant (% of normal wages)

22%

20%

17%

13%

10%

Employer Cost (% normal wages)

55%

60%

67%

73%

80%

The employer will be reimbursed in arrears for the Government contribution. All small and medium sized enterprises (SMEs) will be eligible. Large businesses will be required to demonstrate that their business has been adversely affected by COVID-19. The Government also expects that large employers will not be making capital distributions, such as dividends, while using the scheme.

The Job Support Scheme will sit alongside the Job Retention Bonus, which was announced by the Chancellor in July. The Bonus will provide a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed through to the end of January 2021 and who earns at least £520 a month on average between 1 November 2020 and 31 January 2021. Businesses can benefit from both schemes.

For more information on employee related matters, please contact Tim Baker below:

Tim Baker
Director
Tel: +44 (0)20 3667 5971
Email: tbaker@fitzandlaw.com

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