The Chancellor has confirmed that the coronavirus job retention scheme will still end as planned on 31 October 2020 but has unveiled a new job support scheme (JSS) to take its place.
How it will work
The key features of the new scheme, aimed at retaining employees through the winter months, include:
- Employers will continue to pay the wages of staff that work (they will need to work at least 20% of their usual hours to qualify). For any hours not worked, The Government will then pay 61.67% of reference pay and the employer will pay 5%for any usual hours not worked.
- The Government contribution will be capped at £1,541.75 per month and the employer will pay an additional maximum of £125 for hours not worked.
- The JSS will be available to small and medium-sized businesses, and also to large businesses (employers with 250 or more employees) that can demonstrate that they have been adversely impacted by COVID-19, essentially by having equal or lower turnover figures now than prior to the pandemic. Although not a legal condition, the Government has confirmed that they would not expect large businesses to make dividend payments whilst claiming under the JSS, to encourage grants only to be claimed where really needed.
- The JSS will be available to businesses that have not taken advantage of the existing furlough scheme and to employees who have been on the payroll since 23 September 2020 with an RTI submission made to HMRC on or before that date.
- Employees can come on and off the scheme, but there must be a minimum agreed working pattern of seven days.
- The existing job retention bonus scheme announced, for those employees who have been furloughed and are retained on the payroll until at least 31 January 2020, will still be available and can be claimed in addition to the JSS.
- The scheme will run for six months beginning on 1 November 2020 and the Government has advised that they will review the terms of the scheme after three months.
The numbers
As an example, an employee with a usual salary of £2,500 per month working 40% of their normal hours during November would receive total pay of £2,000.05 under the JSS broken down as follows:
- £1,000 paid by the employer for actual hours worked
- £75 paid by the employer for unworked hours
- £925.05 Government contribution for unworked hours
An employee will receive at least 73% of their pay under the scheme, except where the Government contribution has been capped, in which case it could be less.
In the above example, the employee received 80% of their normal pay for working 40% of their hours.
The employer will be required to cover all employer’s NIC and pension contributions.
Other points to note
There are a few other differences in how the scheme will operate compared to the current furlough scheme including:
- Claims will be paid on a monthly basis in arrears i.e. with the first payment for November being payable from 8 December 2020. At the moment, it is possible to claim up to 14 days in advance of the end of the pay period.
- It has now been confirmed that employers will be able to top up employees pay beyond the minimum contribution at their own discretion, contrary to the original guidance which said that they would not be able to top up.
- Employees cannot be made redundant or given notice of redundancy during the period for which the grant is made.
- As with the furlough scheme, the employer must agree and confirm to the employee in writing the change to their working arrangement.
- Further detail on the new scheme and how the grant can be claimed is expected to be published by HMRC in the coming weeks.