Selena Baker, Associate Director in the Employment & HR team at law firm Greenaway Scott, reviews the new 'Job Support Scheme' announced by the government on the 24th September.
As many people will be aware, the government has announced the latest scheme designed to support businesses who have been affected by the coronavirus pandemic. It is worth mentioning at this point that, much like the coronavirus job retention scheme (furlough) this is a rapidly developing scheme, with guidance changing frequently and more information becoming available daily. The below is based on the initial information we are aware of, which will no doubt be followed by more articles over the coming weeks/months and once we know more. Readers can find our latest guidance on any updates here.
With the furlough scheme finally coming to its conclusion at the end of October 2020, and with the recently re-imposed restrictions being made across the UK, the government were under increased pressure to provide more assistance to employers who are still suffering from a downturn in work and following other European countries having schemes (similar to our furlough scheme) which are set to last for more substantial periods of time. As a result, the Chancellor, Rishi Sunak, has set out the government's new job retention measures in a statement to the House of Commons, which has been followed by a government factsheet which contains limited information on the scheme.
What is it?
Briefly, the scheme is intended to support businesses who are facing a lower demand than usual for this time of year due to the ongoing effects of coronavirus. In contrast to the furlough scheme, the employees will need to be working for the company for at least 33% of their usual hours. The company has to pay the employee for the hours worked. For every hour not worked the employer and the government must each pay one third of the employee's usual pay up to a cap. This will ensure employees earn a minimum of 77% of their normal wages. The Government contribution will be capped at £697.92 a month.
Again, in contrast to the furlough scheme, we understand that employers will not be entitled to top up employees' wages, and so we will have to wait for the guidance to see how this will work in practice.
Grant payments will be made in arrears, reimbursing the employer for the Government's contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
The employee must work at least 33% of their usual hours for the first 3 months (after which time the government will consider whether to increase the minimum required hours) with each short-time working arrangement must cover a minimum period of seven days.
It is worth nothing that the fact sheet has stated that 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.
When will it start?
The scheme is due to open on 1 November 2020 (coinciding with the end of furlough on 31st October).
When will it end?
The scheme is currently due to end in April 2021 (running for 6 months).
Who can use it?
All employers with a UK bank account and UK PAYE schemes can claim the grant however, unlike the coronavirus job retention scheme, we understand that there will be a means test, with large businesses having to meet a financial assessment test to evidence that they have experienced a downturn in terms of turnover and have indicated that employers who are making capital distributions, dividend payments/share buybacks should not use the scheme. Of course, we will better know the parameters of this once the guidance is released.
Employees should be on payroll before 23rd September 2020.
Employers do not need to have previously used the coronavirus job retention scheme.
What do we need to do?
Alike the furlough scheme, employers will need to agree any changes in employment contracts (reducing pay or hours) and to ensure this is agreed in writing for HMRC purposes.
It would be advisable to seek professional advice, particularly when involving changes in employment contracts.
Should you require support and assistance on the employment law implications of the COVID-19 pandemic, the support available for businesses and HR queries, our experienced advisors will be able to provide practical advice to support your business through the process.
For advice, contact our employment & HR team at firstname.lastname@example.org or call us on 029 2009 5500. You can also book an appointment with one of our team at a time to suit you, by clicking here.
The information contained in this article is for information purposes only and is not intended to constitute legal advice.