Job Support Scheme
On Thursday 24th September the Chancellor announced that from 1st November he will introduce a new scheme aimed at supporting “viable” jobs in businesses that are facing lower demand due to Covid-19, to help keep their employees attached to the workforce. This new scheme is set to run for 6 months and according to the statement, the Government will support some of the wage costs.
Click here for a more recent update on the Job Support Scheme.
Key facts announced
- 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.
- 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.
- Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
- 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).
- Employees must be on an employer’s PAYE payroll 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.
- Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked.
- 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.
Joe normally works 5 days a week and earns £350 a week. His company is suffering reduced sales due to COVID-19. Rather than making Joe redundant, the company puts Joe on the Job Support Scheme, working 2 days a week (40% of his usual hours).
Joe’s employer pays him £140 for the days he works and for the time he is not working (3 days or 60%, worth £210), he will also earn 2/3, or £140, bringing his total earnings to £280, 80% of his normal wage.
The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of Joe’s normal wages) to Joe’s employer to help them keep his job.