In light of the resurgence in COVID cases as we enter the winter months, and in anticipation of the further strain on businesses this could cause, the UK Government announced the Job Support Scheme as a new incentive to protect viable jobs. The Government has released a factsheet setting out basic details of the scheme; further guidance is expected in the near future. In the meantime, answers to some of the most frequently asked questions can be found below.
When does the scheme open and for how long will it run?
The new scheme will open on 1 November and will run for six months, until the end of April 2021.
Employers will be able to claim payment under the scheme in arrears. Claims can be made from December.
Which employers can claim under the Job Support Scheme?
All employers with a UK bank account and PAYE scheme can theoretically claim under the scheme. It is not necessary to have used the furlough scheme in the past.
Small and medium sized enterprises ('SME's) will not have to meet any financial requirements to claim under the scheme, whereas 'large employers' will be subject to a financial assessment test.
The factsheet does not state what counts as an 'SME', but it is expected that the usual definition will apply (ie an organisation with fewer than 250 employees and either a turnover of no more than €50 million or a balance sheet total of no more than €43 million) and all other employers will be 'large employers'. The Government will clarify when further guidance is released.
Large employers will need to meet a financial assessment test to claim under the scheme. The factsheet says the scheme is intended to be available only to employers whose turnover is lower now than before experiencing difficulties from COVID, and the Government expects large employers who use the scheme not to be paying out dividends to shareholders or undertaking share buybacks.
Which employees are eligible to be placed on the Job Support Scheme?
The employee must have been on the employer's payroll on or before 23 September 2020.
At the outset of the scheme, the employee must also work at least 33% of their normal hours. After three months the Government will consider increasing this minimum hours threshold.
What does the employer need to do to place employees on the scheme?
In addition to ensuring that the eligibility criteria are met, the employer must agree the 'short-time working' arrangements with the employee, make any changes by agreement to the employment contract (eg to hours and pay provisions) and notify the employee.
How much can employers claim per employee and how much does the employee receive?
Under the rules of the scheme the employee must be paid their usual wage for the hours they work. For every hour they do not work, they will receive up to 2/3 of their usual hourly wage: 1/3 from the employer and 1/3 from the Government (although the Government contribution is capped at £697.92 per month). The employee will therefore be agreeing to no pay for the remaining 1/3 (or more if the Government cap applies).
To take an example: if the employee works the minimum 33% hours required, they will not be working for 67% of their usual hours. The employer will pay 1/3 of this and the Government another 1/3 (subject to the cap). 2/3 of 67% is approximately 44%, so in total the employee would receive 77% (33% plus 44%) of their usual weekly wage (if the Government cap does not apply).
The employer will still have to pay Class 1 employer National Insurance contributions and any pension contributions in respect of each employee.
When will the grant be paid?
Grant payments will be made in arrears, reimbursing the employer for the Government's contribution on a monthly basis.
Once the scheme is open, a claim can only be submitted in respect of a given pay period, after the employee has been paid by the employer and that payment has been reported to HMRC in the form of an RTI return.
Can employers ask employees to work more than 33% of their normal hours?
Yes. They will still receive up to 2/3 of their usual hourly wage for the unworked hours (1/3 from the employer and 1/3 from the Government, subject to the cap) so the more they work, the greater the proportion of their usual weekly wage they will receive.
For example, if an employee works 70% of their normal hours (for which they are paid their usual wage), they will not be working for 30% of their usual hours. They will receive up to 2/3 pay for this 30%. 2/3 of 30% is 20%, so in total the employee will receive 90% (70% plus 20%) of their usual wage that week (if the Government cap does not apply).
Can employees be moved on and off the scheme?
Yes. Employees can be placed on and taken off the scheme as needed. However, each period that the employee is 'on the scheme' must last at least seven days.
Can an employer place an employee on the scheme when there are planned redundancies?
Employers must not make employees redundant or give notice of redundancy during the period that the employees are on the Job Support Scheme. The factsheet makes it clear that the purpose of the scheme is to protect against redundancies in otherwise viable jobs.
Are there any other rules of the scheme to be aware of?
The factsheet states that the Government's 'expectation is that employers cannot top up their employees' wages above the two-thirds contribution...at their own expense'. It is not yet clear whether this will be a rule of the scheme or simply an acknowledgement that employers using the scheme should not be able to afford to top up employee wages. Further guidance on this point is awaited.
The Government has not yet set out further rules of the scheme, although guidance is expected shortly.
If you need further explanation or help with the new Job Support Scheme, please speak to a member of our employment team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.