The furlough scheme is coming to an end this month.
Here is what you need to know about the Job Support Scheme, which will start on the 1st of November 2020 and run for 6 months.
What is it?
- The job support scheme has been put in place to help protect viable jobs in businesses that are facing lower demand over the winter months due to Covid-19. The government will pay a third of hours not worked up to a cap, with the employer also contributing a third.
- Employers using the Job Support Scheme may be able to claim the Job Retention Bonus if they meet the criteria. For more info on the Job Retention Bonus click here – HMRC Job Retention Bonus
Who is eligible?
- Employers – All employers with a UK bank account and UK PAYE Schemes can claim the grant. Also, neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
- Larger businesses will have to meet a financial assessment test. The scheme is only available to those with a turnover lower now than before Covid-19. There will be no financial assessment test for small and medium size businesses (SME’s).
- Employees – Must be on an employer’s PAYE payroll on or before 23 September 2020. This means a real-time information submission (RTI) notifying payment to that employee to HMRC must have been made on or before the 23 September.
- In the first three months of the scheme, the employee must work at least 33% of their usual hours. After three months the government will consider where to increase this minimum hour’s threshold.
- Employees will be able to come on and off the scheme and don’t have to be working the same pattern each month, but each short-term working arrangement must cover a minimum period of seven days.
What does the grant cover?
- So, for every hour not worked by the employee both the government and the employer will pay a third each of the usual hourly wages. The Government contribution will be capped at £697.92 a month.
- The grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant doesn’t cover Class 1 employer NICs or pension contributions. These contributions will remain payable by the employer.
- The ‘usual wages’ calculations will follow a similar methodology as the Coronavirus Job Retention Scheme. More guidance will be set out shortly by the government.
What does it mean to be on reduced hours?
- The employee must be working at least 33% of their usual hours.
- For the time worked, employees must be paid their normal contracted wage.
- For the time not worked, the employee will be paid up to two thirds of their usual wage.
- Employees can’t be made redundant or put on notice of redundancy during the period within which their employee is claiming the grant for that employee.
How can you claim?
- The scheme will open from 1 November 2020 to the end of April 2021. Employers will be able to claim on Gov.uk from December 2020. You will be paid on a monthly basis.
- Grants will be payable in arrears, this means that a claim can only be submitted in respect of a given pay period. After payment to the employee has been made and that payment has been reported to HMRC via an RTI return (real-time information).
HMRC will be checking claims
Payments may be withheld or need to be paid back if a claim is found to be fraudulent. Grants can only be used as a reimbursement for wage costs actually incurred. As an employer, you must agree the new short-time working arrangements with your staff, make any changes to the employment contract by agreement, and notify your employee in writing.
This agreement must be made available to HMRC on request. HMRC’s intention that employees will be informed by HMRC directly of the full details of the claim. For more information head over to www.gov.uk
Alternatively, give us a call or an email to discuss your options.