COVID-19 – Business Support – Major Changes to the Job Support Scheme

The Chancellor of the Exchequer, Rishi Sunak, has announced major changes to the Job Support Scheme in response to the changing COVID-19 landscape. 

The Job Support Scheme Open starts from 1st November and will run for six months.  It is designed to support businesses that can operate safely but are facing lower demand over the winter months due to COVID-19.

Under the scheme, the minimum hours required for employees to work has been reduced from 33% to 20% and the employer contribution for non-worked hours has been lowered from 33% to 5%.

The Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing 5% of non-worked hours up to a cap of £125.00 per month.  These caps are driven by a monthly base amount of £3,125.00.   

As a result, an employee will earn a minimum of 73% of their normal wages where these usual wages do not exceed the base amount.

As before, the scheme is open to all employers with a UK bank account and a UK PAYE scheme but large businesses will be required to demonstrate that their business has been adversely affected by COVID-19.

Importantly, the Job Support Scheme Open will be available to businesses even if they have not previously used the furlough scheme. 

For an employee to be eligible, they must be on the company payroll before midnight on 23rd September 2020.  In other words, a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.

Employees will be able to be moved on and off the scheme and do not have to be working the same pattern each month.  However, the minimum claim period will be seven consecutive days.

Along with the 5% of non-worked hours, the employer will be responsible for the full Employer’s National Insurance and automatic enrolment pension contribution.

In the same manner as the Job Retention Scheme, the grant payments reimbursing the element covered by the Government will be made in arrears.

For the worked hours, the employer must pay the employees their contracted rate.   For the non-worked hours, the employer must pay the employees the Government and employer contributions in full.  However, employers can top up employee’s wages above the 5% contribution at their own discretion.

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.

Employers using the Job Support Scheme Open will also be able to claim the Job Retention Bonus which offers a one-off payment of £1,000 to UK employers for every furloughed employee who remains continuously employed and paid through to the end of January 2021.

It is important to recognise that short time working arrangements are a change to the employee’s employment contract.  As a result, this can only be done by mutual accord and with the signed agreement of the employee.  HMRC may ask for these agreements to be made available.

As an example, under the scheme, an employee with a monthly gross salary of £1,800.00 who can work for one day a week would be paid £360.00 for the time worked.  For the time not worked, the employer would pay £72.00 and the Government would pay £888.05.  As a result, the employee would receive £1,320.05 gross pay.

Earlier in the month, the Chancellor announced that there will be a Job Support Scheme expansion for closed business premises where the business is legally required to close as a direct result of COVID-19 restrictions.  The Job Support Scheme Closed will run under the same eligibility criteria.

However, businesses required to close as a result of a specific workplace COVID-19 outbreak are not eligible for this scheme.

For each eligible employee, the Government will cover two-thirds of their normal pay up to a limit of £2,083.33 per month.

Although there is no requirement for the employer to top up this amount, they will still be responsible for the Employer’s National Insurance and automatic enrolment pension contribution.

As with the Job Retention Scheme, these grants will be payable in arrears.  The first claim for pay periods ending and paid in November will be able to be submitted from 8th December.  HMRC are due to be publishing further guidance on the claim process this week.