Rishi Sunak has announced a new Job Support Scheme that will run from 1 November to April 2021, designed to help keep employees attached to the workforce during winter months as a result of Covid-19.
Companies will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer, the Government, and the employee (through a wage reduction) – with the employee keeping their job.
The Government will pay 1/3 of the hours not worked up to a cap of £697.92 per month, ensuring employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped. Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria and receive £1,000 after February 2020.
Who is eligible?
1. 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.
2. 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 they experienced difficulties due to Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).
3. Our expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance.
4. Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
5. 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 hour’s threshold.
6. 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?
1. For every hour not worked by the employee, both the Government and employer will pay 1/3 each of the usual hourly wage. The Government contribution will be capped at £697.92 a month.
2. “Usual wages” will follow a similar methodology as the Coronavirus Job Retention scheme.
3. Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
- Hannah normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Hannah redundant, the company puts Hannah on the Job Support Scheme, working 2 days a week (40% of her usual hours).
- Her employer pays Hannah £140 for the days she works. (£350 / 5 x 2 days = £140)
- And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, and £140, bringing her total earnings to £280, 80% of her normal wage.
- The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Hannah’s employer to support them in keeping Hannah’s job.
|Hours Employee Worked||
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||78%||80%||83%||87%||905|
|Gov’t Grant (% of normal wages)||22%||20%||17%||13%||10%|
|Employer Cost (% normal wages)||55%||60%||67%||73%||80%|
Our team are of course here to help if you wish to discuss any of the above in more detail. We remain committed to our clients to provide support to get you through the difficult climate we currently find ourselves in, so please do not hesitate to contact your normal Rickard Luckin contact.