We are sure you will have seen the news today about the new Covid Job Support Scheme that will come into effect on 1 November. There is as yet no Govt Guidance on the Gov.uk covid webpages but we have received a copy of the factsheet and it sets out the details we know so far.
Key highlights:
- It is a new scheme so it can be used for employees who were not previously furloughed – they must be on your payroll on or before 23 Sept(an RTI must have been made or before that date regarding the employee) – that was yesterday so there is no opportunity add anyone new to yourpayroll & acces this fund for them
- It will run for 6 months from November 2020 to April 2021
- It is targeted at SMEs
- You must be able to have employees work and be paid for at least 33% of their normal hours (for the first three months of the scheme after which this % will be reviewed by the Govt) – it is intended to protect “viable jobs”
- Employees can cycle on & off this scheme much like the flexible furlough scheme – each period must be a minimum of 7 days
- If you use this scheme you do not lose your eligibility for the Job Retention Bonus in February
- The calculations of payment amounts & responsibilities are quite complex – see the images below for some examples & explanations – payroll are going to be busy!
- The Government contribution is capped at £697.92 per month
- The Government will not cover Class 1 employer NIC or pension contributions but they remain payable by the employer
- VERY IMPORTANT POINT – Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee – this gives us some cause for concern – it would seem (from what we’ve read so far so don’t hold us to it yet) that if you need to make redundancies you’d need to move an employee back to full pay whilst you give notice of that redundancy & for the notice period – a cost that we expect businesses may not be able to afford if they are in a position to need to make redundancies? This is very different to the current furlough schemes.
- A new agreement will need to be in place with employees
Covid Job Support Factsheet
Job Support Scheme Factsheet
- What is it?
• 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 company will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
• Now the economy is opening up, we should target support on those businesses that need it most: focusing on those that are being impacted by Coronavirus and who can support their employees doing some work, but that need more time for demand to recover.
• The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
• Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
• The scheme will open on 1 November 2020 and run for 6 months, until April 2021. Further guidance will be published shortly. - Who is eligible?
I. Employers
• 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.
II. Employees
• 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 33% 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. - What does the grant cover?
• 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.
• 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. Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
• Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense. - What does it mean to be on reduced hours?
• The employee must be working at least 33% of their usual hours.
• For the time worked, employees must be paid their normal contracted wage.
• For time not worked, the employee will be paid up to two-thirds of their usual wage.
• Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee. - How can I claim?
• 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. - HMRC checks
• HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred.
• Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
• Our intention is that employees will be informed by HMRC directly of full details of the claim.