Job support scheme FAQs

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This scheme will start from the 1st November as the Furlough scheme comes to an end and will run for a 6 month period.

The aim of this scheme is to subsidise the pay of workers whose jobs only remain viable on reduced hours.  The government and the employer will each fund one third of the difference in hours, with government support capped at £697.92 per month.

To be eligible for the scheme the employee must continue to work at least 33% of their usual hours. All businesses across the UK will be able to take advantage of this scheme even if they have not previously used the furlough scheme.  Larger employers will however need to demonstrate a drop in turnover.

Employers can benefit from both this new job support scheme and the job retention bonus.

General FAQs around the Job support scheme

Are the full details available now?

No, we only have brief details at present with the promise of further details “shortly”.  The following is based on what we know so far.

Who is this aimed at?

This is designed to help employees keep “viable” jobs where there is a long-term need, but a short-term drop in demand that leaves some excess capacity over the winter months.

It will help employers retain valuable employees who they can only provide limited work for at the moment but they don’t want to lose them.

When does the scheme start and finish?

The scheme will run from 1 November 2020 until 30 April 2021.

Can all employers access the scheme?

All SME businesses and some large businesses are eligible, but there are some conditions both implied and written as follows:

  • Must have a UK PAYE scheme
  • Must have a UK bank account
  • Large business will additionally need demonstrate that turnover has reduced compared to before they experienced Covid-19 difficulties.
  • Large businesses are not expected to claim if they continue to make capital distributions such as dividend payments.

Which employees can businesses claim for?

Any employee working between 1/3rd of their normal hours and full-time who was on an RTI submission on or before 23 September;

They do not have to have been included on a previous furlough claim.

Claims and payments:

How much can we claim?

For a qualifying employee the Government will reimburse one third of the salary cost for the unworked hours (subject to a cap of £697.92 per month).

How much will this cost the business then?

The business must pay the contractual pay rate due for every hour worked, plus:

  • One third of the contractual pay for the unworked hours (no mention of a cap at present), plus
  • Employers pension contributions and National Insurance on the full amount due for payment.

How does this break down for employer, employee and the reclaim?

The minimum cost to the employer is where the employee just works one third of their normal hours and in these circumstances the contribution is as follows.  Please be aware that the proportion of cost borne by the employer will be higher if the employee works more than one third of normal working hours:

  • The employee works 33% of their hours and receives 77% of their full time pay (subject to the cap on the Government contribution).
  • The employer will pay 55% and the Government will pay 22%.  The employee will be unpaid for 22% of their full time pay.

Can we top-up the wages as under the “furlough” scheme?

Top up payments should not be paid, presumably because if the business can afford to pay top-ups, they do not require Government assistance.

Can claims be made in advance of paying employees so we have the funds available?

No, the employee must be paid and the RTI return submitted before a claim may be submitted.  The refund will then be made the following month.

This scheme is designed at saving “viable” jobs and presumably the Government feel that if funds are this short then the reality is that these jobs are no longer viable and therefore outside of the scope of the scheme.

Additional FAQs

Can we also claim for the Job Retention Bonus of £1,000 for each furloughed employee retained by the business as well as claiming under the Job Support Scheme?

Yes, this bonus is also available to employers with qualifying employees.

Although this is not payable until February 2021, so the support will benefit those employers who can see continued employment for these job roles into next Spring.

Is this right for my business?

This will be very helpful in terms of subsidising the payroll costs of key employees where there is a genuine long-term prospect of retention, but a short-term demand issue.

This will provide a way to retain employees in whom considerable training and investment has been made and who the employer may find costly and difficult to replace.

Importantly and in a change to the current furlough scheme, employees cannot be made redundant or put on notice of redundancy during the period for which the employer is claiming a grant for that employee. What is not clear is whether that refers to the whole six months or a particular pay period (and it is not clear yet what will happen to previous payments if someone is made redundant).

This will not be appropriate for employees where the reality is that the job has ceased to exist because:

  • They must work at least one third of their normal hours;
  • The employer will be paying the lions share of the cost;
  • Notice periods cannot be claimed for under this scheme;
  • Claims are not available where a redundancy process has started.

What else should we know:

The employer must agree the new short-term working arrangements and notify the employee in writing, albeit these can be flexible;

HMRC will provide the employee with their claim details, presumably to prompt whistleblowing if employers either underpay the employee, or overclaim from HMRC.

The Government have reserved the right to amend the general scheme rules after three months.  We anticipate that consideration will be given to increasing the one-third minimum working requirement at that time.

Who should I speak to about seeking advice on what to do?

The first point of contact will be your usual Menzies relationship Partner or Manager, but this is likely to result in a cross-referral to the Menzies People Solutions team.

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Andrew Brookes - CTA

Senior Manager

Andrew Brookes is a Senior Manager in the Menzies Solent office specialising in employer tax solutions and corporate tax advisory services.