Chancellor Rishi Sunak announced a new Job Support Scheme on 24 September. Here’s what you need to know.
The Job Support Scheme replaces the furlough scheme (The Job Retention Scheme) which ends on 31 October. The new initiative aims to protect jobs and keep employees working, even if at reduced levels.
It will allow some workers to receive three quarters of their normal salaries for up to six months.
Employers will pay for hours worked, with the burden of hours not worked split between the employer and the Government – through wage support, and the employee – through a wage reduction.
For the first three months of the scheme employees must work at least a third of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.
The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. Guidance from the Treasury states that: “this will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.”
The scheme will open on 1 November 2020 and run for 6 months, until April 2021.
Details of the scheme include:
- For the time worked, employees must be paid their normal contracted wage.
- For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month.
- Employees must be on an employer’s PAYE payroll on or before 23 September 2020.
- 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.
- 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.
- Grants will be payable in arrears meaning 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.
This is our interpretation of the announcement made by the Chancellor and we recommend that you carry out your own independent research to see how this new scheme affects you and your business’s individual circumstances.