Coronavirus Job Support Scheme – saving viable jobs
Updated: 12 Nov 2020
The guidance below has been withdrawn for the time being following the government’s decision to extend the Coronavirus Job Retention Scheme, commonly known as ‘furlough’. As furlough has now been extended into March 2021, we await further information as to whether the Job Support Scheme will be implemented to removed. As this information becomes available we will update this page accordingly.
The government’s Coronavirus Job Retention Scheme, commonly referred to as ‘furlough’, was due to an end on 31 October 2020 and replaced by the new Job Support Scheme. Our current understanding of this new support scheme is outlined below and you can find additional information about government support in our COVID-19 Resource Centre.
We await further detail on the Job Support Scheme and it is likely that there will be further changes, updates and clarifi ations to the information below, however a government policy paper can be viewed here.
Job Support Scheme
The Job Support Scheme begins on 01 November 2020 and is designed to protect viable jobs in organisations that are impacted by lower demand in the coming months due to COVID-19. The scheme will initially run for 6 months until April 2021.
The scheme is designed to enable, wherever possible, employers to retain talent within their organisations until such time that the coronavirus pandemic has abated, and businesses can return to a normal state of operations.
How the Job Support Scheme works
Under the Job Support Scheme, employers will continue to pay their employees for the time they work. Employees must work a minimum of 33% of their standard hours and for the hours that are not worked, some of the cost will be subsidised by the government through wage support. This means the cost burden will be split between employers and the government, and employees’ wages will be reduced in exchange for retaining employees on payroll.
The government will pay 1/3 of hours not worked (limits apply), and employers will also contribute 1/3. This means employees will continue to receive a minimum of 77% of their normal wages, assuming the government contribution is within the upper limit of the scheme.
Given employers using the Job Support Scheme will be retaining their employees, they may also qualify for the Coronavirus Job Retention Bonus if eligibility conditions are met.
Understanding employer eligibility
Employers can apply under the Job Support Scheme even if they have previously not applied for the Coronavirus Job Retention Scheme.
- Have a UK bank account and a UK PAYE scheme
- If they are a large business, undergo a financial assessment test (the definition of ‘large business’ has still to be provided)
- Not be making capital distributions (such as dividend payments and share buybacks) whilst accessing this grant
Understanding employee eligibility
- Be on their employer’s PAYE payroll and notified by RTI on or before 23 September 2020
- Work at least 33% of their usual hours during the claim period. The government will review the scheme in April 2021
- Work for a minimum period of 7 days when they are subsidised under this scheme, but they are able to cycle on and off the scheme as their working patterns vary each month, which offers some flexibility
What does the Job Support Scheme grant cover?
The Job Support Scheme operates as follows:
- For each hour not worked by an employee, the government will pay 1/3 of the usual hourly wage for each employee so long as the employer pays an additional 1/3
- A limit of £697.92 per month applies to the government’s contribution towards each employee’s wage
- Payments will be made in arrears to employers to reimburse the government’s contribution
- Government grants under this scheme do not cover Class 1 Employer NICs or pension contributions – these remain payable by the employer on the full amount paid to the employee and the usual legal requirements must be observed
- Employers can top up their employee pay if they wish
- Employees that have previously been furloughed qualify and will have their normal pay/hours used to calculate ‘usual wages’ under this scheme – not the amount they were paid under the furlough scheme
- The definition of ‘usual hourly wage’ will be set out by government, but is expected to follow a similar methodology as the Coronavirus Job Retention Scheme
- It is expected that the scheme will cover zero hours contractual workers, although the basis for this has yet to be confirmed by the government
How ‘reduced hours’ are defined under the Job Support Scheme
Under the Job Support Scheme reduced hours are defined as:
- The employee must be working at least 1/3 of their usual hours
- For the hours worked, employees must be paid their normal wage
- For hours not worked, employees will be paid up to 2/3 of their usual wage
- Employees cannot be made redundant or put on notice of redundancy during the period that their employer is claiming a grant for that employee
How to claim and other important points
The scheme was due to replace the previous ‘furlough’ scheme on 01 November 2020 and will run initially for 6 months until the end of April 2021.
Claims were expected to be made through gov.uk starting in December 2020 and grants will be payable in arrears. This means a claim can only be made in respect of a given pay period after payment has been made to the employee and reported via a RTI return to HMRC.
Employers must agree new working arrangements with their employees, notifying them in writing.
HMRC will check claims and reserve the right to withhold or demand repayment of grant payments if a claim if found to be based on incorrect or fraudulent information.
Job Support Scheme – Example Scenario
Beth normally works in a coffee shop 5 days a week and earns £350 per week. Her employer is suffering reduced sales due to the coronavirus pandemic. Rather than making Beth redundant, she is placed onto the Job Support Scheme by her employer and now works 2 days a week (40% of her previous usual hours).
Beth’s employer pays her £140 for the days she works (£70 per day). For the time she is not working (3 days or 60% of her usual hours, worth £210 in wages), she will also earn:
- 2/3 (or £140), bringing her total earnings to £280 (80% of her usual wage)
- The government will provide a grant of £70 (1/3 of hours not worked, equivalent to 20% of her usual wages) to Beth’s employer to support them in keeping her employed
The amount employers must contribute will vary according to the number of hours each employee works, as illustrated below:
This article is based on our understanding and interpretation (as of 03 Nov 2020) of the official government factsheet for the Job Support Scheme, which can be downloaded here. This information is subject to change and further clarifications from UK government.
We want to keep you in the picture: if you have any questions about the Job Support Scheme or Coronavirus Job Retention Bonus Scheme and how they apply to your business, please contact us and a colleague will be happy to help you.