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Sunday, 29 November 2020

Job Support Scheme: What businesses and employees need to know

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Job Support Scheme: What businesses and employees need to know – Chancellor Rishi Sunak has unveiled a new Job Support Scheme, which will replace the Coronavirus Job Retention Scheme (CJRS) when it ends on 31 October.

Laura Kearsley, partner and solicitor in Nelsons’ employment law team, explains what this means for businesses and employees.

Job Support Scheme: What businesses and employees need to know

What is the Job Support Scheme and how will it operate?

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“The new scheme will be in place for six months from 1 November and aims to protect viable jobs in companies that are facing reduced demand due to the impact of Covid-19 over the winter months.

“The Job Support Scheme will work on the following basis:

  • Employees work a minimum of 33% of their normal working hours.
  • For the remaining hours not worked, employers and the government will each pay one third (22%) of the employees’ equivalent salary.
  • The employee will therefore receive at least 77% of their normal working pay.

“The level of wages paid will be calculated based on the employee’s usual salary, with the government’s contribution capped at £697.92 per month. It is believed businesses will not be able to top up their employees’ pay at their own expense above the two thirds contribution to hours not worked.

“The grant payments businesses will receive via the scheme will not cover Class 1 employer National Insurance (NI) or pension contributions – these will still have to be paid by the employer.

“Employers and employees have to both agree to the new short-term working arrangements, and businesses will need to notify employees in writing of the arrangements and make any changes as appropriate to their employment contracts.”

How will the grants be calculated and paid out?

“The methodology used for calculating employee wages will be similar to that used for CJRS payments but further details on this will follow shortly.

“Businesses will be able to claim via the Gov.uk website from December and claims will be paid out on a monthly basis. Companies will be reimbursed in arrears for the government’s contribution. All claims will be subject to HMRC checks, as they were with furlough leave claims.”

Which businesses is the scheme available to?

“The scheme – which will be open to employers across the United Kingdom – will be available to companies that:

  • Haven’t previously accessed the furlough scheme, as well as those that have;
  • Businesses with a UK bank account and a PAYE scheme; and
  • All small and medium-sized enterprises (SMEs).

“Large companies will have to undertake a financial assessment test and provide proof that their commercial operations have been severely impacted by the coronavirus in order to be eligible. The government also expects that large businesses will not be making capital distributions (such as dividends or share buybacks) while accessing the Job Support Scheme.

“Employers will also still able to claim the one-off Jobs Retention Bonus payment of £1,000 for formerly furloughed employees who remain in their job roles until at least February.”

Which employees is the scheme available to?

“In order to use the scheme, employees must:

  • Be on an employer’s PAYE payroll on or before 23 September 2020. This includes a Real Time Information (RTI) submission, notifying payment to an employee to HMRC being made on or prior to 23 September 2020.
  • Not have received notice of redundancy in order to be eligible.

“For the initial three months of the Job Support Scheme, employees have to work at least 33% of their normal working hours. After three months, the government may increase the minimum hour’s threshold.

“Workers will be able to come on and off the scheme and don’t have to work the same schedule of working hours each month. However, all short-time working arrangements have to cover a minimum period of seven days.”

What about for the self-employed?

“In addition to the Jobs Support Scheme, the Chancellor also confirmed during the Winter Economy Plan that the Self Employment Income Support Scheme Grant (SEISS) would be extended.

“From November to January 2021, an initial taxable grant will be available which will pay 20% of average monthly profits of a self-employed person, up to a total amount of £1,875. “The grant will be available to those who are currently eligible for the SEISS and are continuing to actively trade but face reduced demand due to Covid-19.

“A further second grant will also be available for self-employed workers to cover February to the end of April 2021. Further details are to be confirmed.”

For more information on managing or supporting your workforce, please visit www.nelsonslaw.co.uk/managing-your-workforce.