Quick update – yes England is going back into a lockdown (a new improved version) – but did you also catch that the Furlough Scheme is back in the mix again. It is the hokey cokey for sure – with working from home/office and the Furlough Scheme vs the Job Support Scheme (JSS).
It is good news for businesses: the Furlough Scheme will not end. It will be open until December.
The Furlough Scheme is the more generous August version ie the Government paying 80% of wages up to a cap of £2500 for hours not worked. Employers will pay employer NICs and pension contributions. Flexible and full time furlough is permitted.
The JSS has been postponed until the Furlough Scheme comes to an end.
Chancellor of the Exchequer, Rishi Sunak, has announced a “new” scheme to address the employment challenges surrounding Covid 19. He’s calling it the Job Support Scheme.
The old Furlough Scheme (aka the Coronavirus Job Retention Scheme) comes to an end formally on 31 October and its successor steps in the next day on 1 November.
Currently it is estimated that nearly 3 million workers are on partial or full furlough leave in the UK.
The new Job Support Scheme will run for 6 months until April 2021.
Who will the Job Support Scheme help?
It is designed to protect viable jobs where businesses are facing a lower demand over the winter months due to Covid-19. It’s goal is to reduce the number of redundancies these businesses would otherwise have to implement.
Employees will keep their job and will be paid for the hours they work.
For the hours employees don’t work, there will be some wage support from the Government and employers.
How is this different from flexible furlough under the Furlough Scheme?
Good question! It does look similar.
Mainly there is less financial support from the Government, lower wages for many employees, and a tightening of controls to avoid some of the problems the Furlough Scheme faced.
The Government contributed 80% initially up to a cap towards furloughed workers’ wages, now the maximum will be 22% contribution from the Government.
How much will an employee be paid?
- Employees will receive normal pay for the hours they work. They must work at least 33% of their usual hours for the first 3 months of the scheme. This might change down the line. The usual hours and pay are the pre-furlough figures.
- They will be paid up to 2/3rds pay for the hours not worked (- 1/3 from the Government and a 1/3 from the employer).
- The Government’s contribution is capped at £697.92 per month.
- The pay amounts to 77% of employees’ normal wages where the Government contribution has not been capped.
Guidance for employers
- The short time working arrangement must cover a minimum of 7 days. There can be a rotation on and off the scheme, provided employees are working 33% of their usual hours overall.
- Don’t forget to agree this contractual change in writing with your employees.
- You cannot make an employee redundant or put them on notice of redundancy while you are claiming the grant for that employee.
- Claims are made from December online and payable in arrears.
- HMRC will check claims to ensure they are not fraudulent or based on incorrect information.
- The grant does not cover pension contributions or class 1 employer NICs which you must still cover.
Who can access it?
- Employers who have a UK Bank account and a UK PAYE scheme
- Businesses can use this new scheme, even if you’ve not used the Furlough Scheme
- Large businesses will need to meet a financial assessment test – turnover needs to be lower now than before experiencing difficulties from Covid 19, and there’s an expectation that you won’t pay dividends etc. if you’re claiming under the scheme
- Employees must be on the PAYE payroll before 23 September 2020
Further guidance will be published shortly. In the meantime, this is the link to the Government factsheet with some examples.
The new scheme may not stop all of the redundancies that were anticipated or being planned, but it is hoped that this additional support for employers and employees will protect a good many jobs for a little while longer.
Don’t forget there is still the Job Retention Bonus too. Employers can get a one-off payment of £1000 for every furloughed employee who remains employed earning £520 per month on average from November to 31 January 2021.