Covid-19 - Announcement of New Job Support Scheme
The Chancellor, Rishi Sunak, today announced his plans for a replacement scheme to take over once the Job Retention Scheme comes to an end on 31 October 2020. The new Job Support Scheme demonstrates the government’s intention to “adapt and evolve” the measures put in place to support businesses and employees through the COVID-19 pandemic.
Job Support Scheme
The new scheme can be used for any employees who were employed on or before 23 September 2020, even if the employer has not used the Job Retention Scheme and even if the employees were not previously furloughed under that scheme. It provides limited support to save “viable” jobs which are still required by the business, albeit at a reduced level due to the COVID-19 pandemic. The scheme is available to all SMEs, and may be available to larger businesses if they can demonstrate that the COVID-19 pandemic has had a negative impact on their turnover. We have yet to learn what criteria will be assessed to decide if a business is an SME, or if a large business has demonstrated a negative impact on turnover due to the COVID-19 pandemic.
The key purpose of the scheme is to avoid redundancies and so, unlike the Job Retention Scheme, employers will not be able to issue notice of redundancy to those for whom they are claiming under the Job Support Scheme.
The scheme is anticipated to come into force on 1 November 2020 and remain in place until 30 April 2021. It will sit alongside the Job Retention Bonus Scheme (£1,000 per eligible retained employee in February 2021) which remains in place. It is anticipated that a similar scheme will be announced for the self-employed in due course.
The scheme will be available only if employees work a minimum of 33% of their “usual” hours (for which they should be paid in full at their normal hourly rate by their employer). This minimum threshold will be reviewed after three months. Provided it is met:
- The employer must also pay the employee 33% of the employee’s normal salary for the hours they would normally work, but are not working; and
- The government will top this up with a further 33% of the employee’s usual salary for the hours during which they would normally work, but are not working; but
- The government’s contribution is subject to a cap of £697.92 per month – this will not cover NIC or pension contributions, which the employer will still have to pay.
The government’s payments will be reimbursed to the employer in arrears.
Under this scheme, an employee working the minimum amount of 33% of their normal hours could receive 77% of their normal earnings, consisting of 33% in respect of the hours actually worked, a 22% contribution from the employer (being one-third of the 66% of normal hours not worked) and a 22% contribution from HMRC (subject to the cap).
As an example:
- If an employee worked 70% of their normal hours, they would be paid 70% of their normal earnings by their employer;
- They would also be paid a 10% top up by the employer (being one-third of the hours they are not working), subject to the cap;
- The scheme would pay out a further a 10% top-up, meaning the employee would receive 90% of normal earnings.
Employees can be cycled on and off the scheme, subject to a minimum period of seven days.
The government has produced a fact sheet on the new scheme which can be found here.
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