UK Government Announces New Job Support Scheme

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The UK Government announced yesterday, as part of its Winter Economy Plan, that from 1 November 2020 it will introduce a new Job Support Scheme, which will replace the existing Coronavirus Job Retention Scheme (“CJRS”), also known as the furlough scheme, when it comes to an end on 31 October 2020.

The Job Support Scheme is designed to support jobs which are still viable – meaning a situation where an employer is able to keep an employee on rather than making them redundant, but where, due to reduced demand as a result of COVID-19, the employee is working shorter hours than normal.

The key points announced so far, and confirmed in the Treasury's press release and a Government fact sheet, are as follows:

  • To be eligible for the support available under the Job Support Scheme, employees will need to have been on the employer’s PAYE payroll on or before 23 September 2020. (This means that a Real Time Information (RTI) submission notifying payment to that employee must have been made to HM Revenue & Customs (HMRC) on or before that date).
  • To qualify, employees will also need to work a minimum of 33% of their usual hours. This minimum required level of work may be increased by the Government on review after the first three months of the Job Support Scheme.
  • For every hour not worked the employer and the Government will each pay one third of the employee’s usual pay. The Government contribution will be capped at £697.92 per month. This means that, where the Government cap does not apply, under the Scheme employees will receive at least 77% of their pay. Claims will be made online via the Gov.uk website from December 2020. The employer will be reimbursed in arrears for the Government contribution.
  • The contribution from the Government will not cover employer’s national insurance contributions or pension contributions which will remain payable by the employer.
  • Employers will need to agree these short time working arrangements with their staff, making any changes to their employment contracts by agreement which must be notified to the employee in writing. The relevant agreements must be made available to HMRC on request.
  • Employees will be able to “cycle” i.e. rotate on and off the Job Support Scheme and do not have to work the same pattern each month. However, each short time working arrangement must cover a minimum period of seven days.
  • The calculation of “normal wages” for the purposes of the Job Support Scheme will be similar to the calculation of normal wages under the CJRS. Calculations for employees who have been on the CJRS will be based on the pay that they would have received had they been working, not their furlough pay.
  • An employee must not be made redundant or put under notice of redundancy during the period when their employer is making a claim under the Job Support Scheme. This is in contrast with the CJRS under which wages are reimbursed even if the employee is serving out notice.
  • The Job Support Scheme will run for six months from 1 November 2020 through to the end of April 2021 and is open to all employers with a UK bank account and a UK PAYE scheme.
  • All Small and Medium-Sized Enterprises (SMEs) will be eligible to participate in the Job Support Scheme.
  • Large businesses will be required to show that their turnover is lower than it was before their business was adversely affected by COVID-19. It is not yet clear what level of adverse effect must be demonstrated, although the various documents published today say that the businesses will be required to “meet a financial assessment test” and that the Government would not expect large employers to be making capital distributions (such as dividends) while using the Job Support Scheme.
  • The Job Support Scheme will be open to all employers even if they have not used the CJRS previously.
  • Employers using the Job Support Scheme will also be able to claim the Government’s new Job Retention Bonus if they meet the relevant eligibility criteria.

Before progressing and finalising their plans and deciding whether they can or will wish to take advantage of the Job Support Scheme, employers will not only need to assess their staffing levels and the costs of taking up the support offered by the Job Support Scheme – they will also need to consider the fine print of the Job Support Scheme once detailed guidance is published.

 

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