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More information on the Job Support Scheme

More information on the Job Support Scheme
Richard Hiron Oct 22,2020
blog post

Further to our news article of 25 September 2020†in which we dissected the Job Support Scheme, the Chancellor of the Exchequer, Rishi Sunak has announced further amendments to that scheme.

In order to support businesses whilst the impact of Covid-19 continues, the government has made amendments to the Scheme, chiefly to the contributions that it will make to employees' pay and to the contributions that employers will be required to make to their employees' salary.†

We have broken down the key elements of the Scheme for you below.

What will the Job Support Scheme do?

The Scheme will still run for 6 months starting from 1 November 2020.

Like furlough leave (which is still due to come to an end on 31 October 2020), the Scheme is open to all employers with a UK bank account and a UK PAYE Scheme (more on this below).

Small and medium enterprises are eligible to apply for it, but large businesses will need to demonstrate that they have been adversely affected by Covid-19 and will be expected to forego distributions of their capital (such as the payment of dividends to their shareholders) before they can access the Scheme.

Once this condition has been met, employers must ensure that their employees are working for at least 20% of their normal working hours and pay them accordingly.

After that, employers only need to make a 5% contribution towards employees' wages for hours not worked (capped at £125 per month, but allowing the employer the discretion to pay more than 5% of unworked hours per month), plus National Insurance contributions and automatic enrolment pension contributions in full. The government will contribute 61.67% of unworked hours up to a monthly cap of £1,541.75.

HM Treasury has worked this into a specific example, as follows:-

"...if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44."

Another example given by the Treasury reads as follows:-

"Example: a typical full-time employee in the hospitality industry is paid an average of £1,100 per month. Under the Jobs Support Scheme for open businesses, they will still take home at least £807 a month. All the employer needs to pay is a total of £283 a month or just £70 a week; the government will pay the rest."

What's the catch?

As was the case with the furlough leave scheme, there are provisos to all of this, besides the conditions set out above relating to minimum working hours, having a UK bank account, a UK PAYE Scheme and, in particular, the conditions affecting large businesses.

Employers will need to ensure that those employees that they are claiming for were on their Real Time Information submission for PAYE purposes either on or before 23 September 2020.

Aside from the minimum 20% of working hours set out above, the government has not (yet) repeated its previous proviso that the employer's contributions to worked hours may increase in the fourth to sixth months of the Scheme's operation so, once again, watch this space for further developments.

As before, an employer cannot make an employee redundant or put them on notice of redundancy whilst using the Scheme.

What else do I need to know?

The new guidance has specifically set out that employers making use of the Scheme can still apply for the Job Retention Bonus that was announced during the life of furlough leave.

Additionally, the rules set out above apply for businesses that are remaining open, whilst those that are forced to close due to restrictions arising from Covid-19 and have employees who have been unable to work for 7 or more consecutive days because of those restrictions have quite different rules. See our blog on those rules here.

At the time of writing, other than for those points addressed above, we understand that the further provisions set out in our article of 25 September 2020†will remain the same.

This article is intended for information purposes only and not as a substitute for legal advice. TP Legal does not accept any responsibility for any decisions that you may make as a result of reading this article. Should you require legal advice specific to your circumstances, please do not hesitate to contact us.