On 24 September 2020, the Chancellor announced the new Job Support Scheme which will replace furlough, starting from 1 November 2020, and run for six months until April 2021.
The Scheme is designed to protect viable jobs in businesses facing lower demand due to COVID-19. The employer continues to pay its employee for the time they work, but the financial burden of hours not worked will be split between the employer, the Government and the employee in equal shares.
Who is eligible?
Employers with a UK bank account and UK PAYE schemes can claim the grant and neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
There will be no financial assessment test for small and medium enterprises, but a definition is yet to be confirmed – it is believed that this could mean businesses with under 250 employees, turnover of less than £25 million and gross assets of less than £12.5 million. Large businesses will have to meet a financial assessment test, so the Scheme is only available to those whose turnover has fallen during the pandemic and there are expected to be limits on such businesses making capital distributions, dividend payments or share buybacks.
To be eligible, employees must be on an employer’s PAYE payroll, with an RTI submission notifying HMRC of payment, on or before 23 September 2020. Those on zero-hours contracts and irregular hours will also be eligible.
Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing.
What does the grant cover?
An employee will need to work and be paid for at least one third of their normal hours (33%) and the Government and employer will each pay one third of the hours that are not worked – for example, if an individual works 33% of their usual hours the employee will be paid 78% of their usual salary, of which 55% (33% for work done and 22% for unworked time) will be paid by the employer and 22% by the Government. The Government contribution will, however, be capped at £697.92 per month. The grant will not cover Class 1 employer NICs or pension contributions. These contributions will remain payable by the employer.
Employees cannot be made redundant or put on notice of redundancy during the period that the employer is claiming the grant for that employee.
How can I claim?
Employers will be able to make a claim online through the Government’s website from December 2020, being reimbursed in arrears for the Government contribution. They will be paid on a monthly basis.
HMRC will check claims and therefore payments may be withheld or require repayment if a claim is found to be fraudulent or based on incorrect information. A fraudulent claim could also result in criminal prosecution.
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