Yesterday, the Chancellor announced the Job Support Scheme and provided a brief outline of how it will work. The government has now published a factsheet that provides some more details.
Which employers can apply for a grant?
All employers with a UK bank account and UK PAYE scheme can claim. As we indicated yesterday, neither the employer or employee needs to have previously used the furlough scheme.
All SME's can apply for a grant. However, large businesses (a concept not yet defined) will need to meet a 'financial assessment test' to be eligible. The factsheet simply says that the scheme will only be available to large employers whose turnover is lower than it was pre-Covid. There is also an 'expectation' that large employers using the scheme won't be paying dividends to their shareholders or making share buybacks.
Which employees are eligible?
Employees must be on your payroll on or before 23 September 2020. They must also work at least 33% of their usual hours. However, the government may increase this percentage from 1 February 2021 (three months into the scheme).
Your staff don't have to work the same pattern each month, but, you can only claim for a particular week if they have worked shorter hours for a minimum period of seven days.
The requirement for staff to work at least 33% of their usual hours means that employers who don't have enough work for them to do (perhaps because of local lockdowns) won't be able to use the scheme and may be pushed into making redundancies even if their jobs could be viable in the longer-term.
How much will the government pay?
Unlike the furlough scheme, the JSS requires employers to pay the biggest share of the costs. You have to pay your employees for all of the hours they actually work at their normal rates of pay plus a percentage of the time they don't work. The government will then chip in. This means that employees will be paid up to two thirds of their usual wage for the time they don't work.
The minimum you will pay is 55% of the employee's wages and the maximum the government will pay is 22% (which is subject to a monthly cap of £697.92). This means that you will have to pay your staff at their normal rate of pay for time they are not actually working.
Hours employee worked
Hours Employee not working
Employee earnings (% of normal)
Government grant (% of normal wages)
Employer cost (% of normal wages
In addition, you will have to pay Class 1 employer NICs and pension contributions - the government will not contribute to these.
Unlike the furlough scheme, the factsheet implies that will not be able to top up your employees' wages above the two thirds contribution for the hours they don't work.
According to the Resolution Foundation, it would cost an employer 33 per cent more to employ two people half-time under this scheme than it would to employ one person full-time (at an assumed salary of £17,000 a year) - a point that is made by others who have crunched the numbers. That is likely to limit the appeal of the scheme.
Do our employees have to agree to work shorter hours?
You can only access the grant if your employees' agree to work shorter hours. You will need to agree this in writing with them.
Can we still make employees' redundant?
Yes, but if you want to make staff redundant you have to take them off the scheme first. Unlike furlough, you can't use this grant to help meet their notice pay. This is because the scheme is designed to support 'viable jobs'. If you have to make redundancies the jobs are, by definition, not viable.
When does the scheme start?
The Job Support Scheme starts on Sunday 1 November 2020 and lasts for six months. The government has said that it may increase the percentage of time an employee has to work from 33% from February 2021.
How can I claim?
You'll have to submit an online claim. Claims will be paid in arrears on a monthly basis after payment to the employee has been made. This means that you will have to fund the non worked time costs up front and then claim it back from the government.
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The Institute of Directors, which represents business leaders who will be making hiring and firing decisions over the coming months, said it was “not yet clear how much the job support scheme will help hard-pressed firms hold onto staff”.