The chancellor Rishi Sunak has announced plans to support workers and employers over the winter following the tapering of the Coronavrius Job Retention Scheme (CJRS) which will finish on 31 October and the recent local and national restrictions. Full guidance will follow, but the details so far are evidence of the support adapting and evolving. This is targeted support, for viable jobs, rather than a blanket approach.

The Job Support Scheme starts on 1 November, and will provide grants supporting the wages of those in employment for 6 months. Employers now have the ability to keep staff in work for shorter hours, rather than making redundancies, and claim a grant to assist in ‘topping up’ the wages for hours not worked, by a third, but not as generously as the furlough scheme.

Who is eligible?

• All Employers with a UK bank account, and UK PAYE schemes can claim the grant
  • There is no requirement for the Employer to have claimed under the CJRS or for the employee to have been placed on furlough.
  • Small and medium sized firms are eligible (with no financial test), larger firms however will need to demonstrate a fall in turnover during this crisis.
• Employees must be on PAYE payroll on or before 23 September 2020,
  • A Real Time Information (RTI) to HMRC must have been made on or before 23 September 2020.
  • For the first three months of the scheme, employees must work at least 33% of their usual hours, after three months the government may increase this minimum threshold.
  • Each working arrangement must cover a minimum period of 7 days.
  • Employees can alternate on and off the scheme, with different working patterns.

The Grant

• The hours not worked by the employee will be paid jointly by the government and the employer, each will pay a third of the usual hourly rate, the government contribution is capped at £697.92 a month.
• ‘Usual wages’ will be calculated in a similar fashion to the CJRS, and those employees furloughed will have their pre-furlough usual pay / hours referenced, rather than amount paid during furlough.
• Grant payments, as with the CJRS will paid in arrears, covering the government’s contribution to the unworked hours. Class 1 employer NICs and pensions contributions will not be covered by the grant and remain payable by the employer.
• The wages for the hours worked, the government contribution and the employer contribution to hours not worked are to paid to the employee by the employer, the employer then claims back the government contribution, on a monthly basis via an online platform through Gov.uk from December 2020.

The Result?

• Employees working at least 33 % of their hours will receive at least 77% of their pay.
• The sliding scale means as the employer pays more for more hours worked, the government then in turn pays less of the ‘smaller’ lost wage.
• Employers will not be able to issue redundancy notices to employees on the Job Support Scheme, and whilst in receipt of monies from this scheme there will be restrictions on capital distributions to shareholders.
• Employers are still able to claim the job retention bonus, subject to qualifying criteria, as well as the claim under the Job Support Scheme.

Next Steps

Employers should consult and seek agreement with employees to any new short time working arrangements, and notify employees in writing, HMRC may request this documentation. We also understand that employees will be notified by HMRC directly regarding the claim, no doubt an attempt to deter fraudulent claims. As with any initial announcement there are still plenty of questions, and some employees will no doubt fall foul of the eligibility date. For further assessment and help with your business please contact the employment team.