The Job Support Scheme comes into effect from 1 November which will replace the existing Job Retention Scheme (furlough) at the end of October.
What is the Job Support Scheme?
It has been launched to directly support the wages of people in work, giving businesses the option of keeping employees in a job on shorter hours rather than making them redundant.
In a nutshell:
It aims to support viable jobs so employees must be working at least a third of their normal hours and be paid for that work, as normal, by their employer.
The government, together with employers, will increase those employees’ wages covering 2/3 of the pay they have lost by reducing their working hours.
Running November to April, all small & medium sized businesses are eligible to apply. But larger businesses only when their turnover has fallen. Businesses are eligible even if they have not previously used the furlough scheme.
Employers retaining furloughed staff on shorter hours can claim both the Jobs Support Scheme and the Jobs Retention Bonus.
The level of grant will be calculated based on the worker’s usual salary, capped at £697.92 per month.
What it covers (and what it doesn’t)
No further guidance has been issued yet. However, the government has published a fact sheet with more detail:
The grant does not cover Class 1 employer NIC or pension contributions these will remain payable by the employer.
Employers can’t top up wages. The guidance suggests that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense. This is different to the furlough scheme where employers could top up.
Employees must have been on the payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
Employers can use the scheme flexibly. 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.
It is calculated based on normal wages. Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.
The scheme opens on 1 November we anticipate it will be via the same platform used to claim furlough payments.
What should you do next?
The most important factor to consider is whether the scheme will work for your business. We recommend you do the maths and calculate whether it will make financial sense.
If you are going to use the scheme then you will need to inform those employees who are affected. As their pay will be reducing, you will need to get agreement from them as this is a change to their contractual terms. You will need to update HR documentation to reflect this.