As we must expect restrictions to normal life continue for at least another 6 months, and with the Furlough scheme ending in October, the Government have devised a new scheme to help keep employees in work and hopefully avoid the need for redundancies.
On 24 September, the Chancellor announced the new Job Support Scheme. We now have further details behind how this scheme will work. Although, we expect to continue to receive clarification as queries arise and as we work through the practical implementation of the scheme.
What is the Job Support Scheme?
The Job Support Scheme will see the Government directly supporting the wages of people in work, giving businesses the option to keep employees in jobs on shorter hours rather than making them redundant.
How will it work?
For the hours that an employee does not work, the Government and the Employer will pay one third. What this means is that the burden of responsibility for wages relating to unworked hours is shared three ways, Government, Employer, Employee.
For the employee, they must take a pay cut, they will essentially receive up to two-thirds of their usual wage; for the Employer, they will pay for the hours worked, as well as one third of those hours not worked, and for the Government, they will pay one third of the hours not worked.
The contribution by the Government will be capped at £697.92 per month. This means, that employees on the scheme, will receive at least 77% of their pay where the government contribution has not been capped.
Who will qualify?
To qualify for the Scheme, then the employee must work at least 33% of their usual hours for the first three months. Thereafter, the Government will review whether to increase the minimum hours threshold.
It will not matter whether the employee has been previously furloughed. This is a separate scheme and open to all Employees who are on the PAYE on or before 23 September 2020.
For larger organisations, eligibility will be determined by their turnover, but for SMEs, there will be no financial test.
Any practical considerations?
First, there is an expectation that for large organisation’s using the scheme, they will not be making capital distributions (dividend payments, share buybacks) whilst using the scheme.
Secondly, employees will be able to go on and off the scheme, which gives the Employer flexibility in managing workload and business needs at this challenging time. The employee does not have to be working the same working pattern each month; however, each arrangement must be for a minimum of seven days.
There will also be a requirement that Employers will not be able to make the employee redundant or serve notice of redundancy during the period for which the grant is being claimed for.
Processing a claim
As with all other grants and loans, claims will be made online via the Government website. Whilst the scheme is available from the 1 November 2020, claims cannot be made until December 2020. The grants will be paid in arrears monthly.
As with the Coronavirus Job Retention Scheme (Furlough), the HMRC will check claims to ensure there is no fraudulent use of the scheme.
Changes to the Contract of Employment
As with Furlough, the new short time working arrangements must be agreed with the employee and the agreed changes to the employment contract must be put in writing. HMRC reserve the right to request a copy of the written agreement as part of their checks.
We are expecting further details to be published by the Government in addition to this initial overview.
Further HR Support
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