As anticipated the Chancellor, Rishi Sunak, has set out the government’s new job retention measures in a statement to the House of Commons. The furlough scheme will come to an end on 31 October 2020. The government has stated that it cannot keep jobs open and movement needs to be made to support and bring people back to work and avoid the cliff edge that employers and employees face when furlough ends. The new Jobs Support Scheme will involve the government supporting the wages of people in work rather than, as with furlough, remaining out of the workplace. This, it is hoped will give employers the option to keep people in work on shorter hours, rather than make them redundant. As was the case when furlough was introduced there is no doubt that key points will be clarified and amended over the coming hours and days. However, the indications given are that employees will have to work at least one-third of their normal hours, and be paid for that by the employer. The government will then top up pay to two-thirds of salary. There was no mention of any maximum payments but no doubt this will be one of the issues to be clarified. All SMEs are eligible, and larger businesses will be eligible but only if their turnover has fallen through the Covid crisis. The new Scheme is open to all employees irrespective of whether they were previously furloughed. The Scheme will run for six months from November.
The self-employed grant is being extended on similar terms and conditions to the new Jobs Support Scheme. Whilst this is the general understanding of the Chancellors speech it has been noted that a tweet sent by HMRC has a different interpretation!
More details of the new Jobs Support Scheme are being delivered as predicted! These provide an insight into how it will operate and importantly the caps and cut off points.
The Government’s Winter Economy Plan which provides:-
2.4 Job Support Scheme – To support viable UK employers who face lower demand due to COVID-19, and to keep their employees attached to the workforce, the government will be introducing a new Job Support Scheme from 1 November 2020. Employees will need to work a minimum of 33% of their usual hours. For every hour not worked the employer and the government will each pay one third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month. Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped. The employer will be reimbursed in arrears for the government contribution. The employee must not be on a redundancy notice. The scheme will run for six months from 1 November 2020 and is open to all employers with a UK bank account and a UK PAYE scheme. 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, and the government expects that large employers will not be making capital distributions (such as dividends), while using the scheme.”
“The employee must not be on a redundancy notice”, suggests that the government will not contribute anything under the Job Support Scheme if an employee is working under notice of redundancy. Contrast this to the position under the Coronavirus Job Retention Scheme, where the scheme did pay out for employees working their redundancy notice.
The Government’s Job Support Scheme Factsheet:
· To be eligible, employees must have been on the employer’s Real Time Information submission on or before 23 September 2020(!)
· The minimum 33% threshold hours for which an employee must work may be increased in months 4-6 of the scheme
· Working patterns can vary, but each short-time working arrangement must cover a minimum period of seven days
· The government’s grant will not cover Class 1 employer NIC or pension contributions, although they remain payable by the employer
· ‘Usual wages’ will follow a “similar” methodology to the CJRS.
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