What do we know about the Job Support Scheme?

The new Job Support Scheme is the latest scheme to be unveiled by the Chancellor.

The scheme is targeted towards businesses who need support and who are affected by the ongoing coronavirus crisis. The scheme applies to those businesses who can support their employees by offering some work but where they are facing lower demand over the winter months and therefore need extra time to recover.

The government has released a factsheet on the new Scheme. Please click here to view.

Whilst we are still awaiting further details following the Chancellor’s announcement last week, the key points to note about the new scheme are:

• The scheme will run for 6 months from December 2020 until the end of April 2021.

• Neither employers or employees need to have used the Coronavirus Job Retention Scheme (furlough) previously.

• Employers using the scheme will also be able to claim the Coronavirus Job Retention Bonus (i.e. £1,000 for retaining furloughed staff).

• In contrast with the Coronavirus Job Retention Scheme, employees cannot be made redundant or put on notice of redundancy during the period for which their employer is claiming under the scheme.

How does it work?

• The scheme protects ‘viable jobs’ in businesses only – employees will need to work at least 33% of their usual hours for the first 3 months of scheme.

• Akin to the latter months of the Coronavirus Job Retention Scheme, employees will be able to cycle on and off the new scheme and do not have to work the same pattern each months.

• For the time worked, the employee must be paid their normal contracted wage by their employer. The cost of the hours not worked will be split between the employer and the government.
• The split involves the government paying a third of hours not worked up to a cap of £697.92 per month and per employee, with the employer also contributing a third of hours not worked. This ensures the employee received a minimum of 77% of their normal wages (where the government’s contribution has not been capped).

Who can claim?

• All employers with a UK bank account and UK PAYE schemes can claim the grant.
• Large businesses will need to meet a financial assessment test to be able to qualify for the scheme. We have not yet received details as to what this will entail.
• There will be no financial assessment test for small and medium enterprises (SMEs).

What can be claimed?

• For hours not worked by the employee, both the government and employer will pay a third of each of the usual hourly wage for that employee. The government’s contribution is capped at £697.92 per month.

• Usual wages calculations will follow a similar methodology as for the Job Retention Scheme.

• Grants can only be used as reimbursement for wage costs actually incurred.

• The grant will not cover employer national insurance contributions or pension contributions. These contributions will remain payable by the employer.

• It is likely that employers will be prohibited from ‘topping up’ an employee’s pay to full pay (as could be done under the Job Retention Scheme).

How to claim

We know that the scheme will be open from 1 November 2020 until the end of April 2021. In the same way as the Job Retention Scheme, employers will be able to make a claim online via Gov.uk from December 2020. Claims will paid on a monthly basis and grants will be payable in arrears i.e. 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.

Agreeing changes with employees

In the same way as the Job Retention Scheme, employers must agree the new short-time working arrangements and changes to the employment contract with their employees. The changes to the employees contractual terms must be documented in writing.

When will the full guidance be released?

We expect the additional guidance to be provided by the government over the next week or so. We hope that this will fill in any of the gaps on the initial factsheet.

Contact us

If you would like any advice on any employment related matter, please contact our employment partner, Kate Brooks on 01202 525333 or email kate.brooks@ellisjones.co.uk