Insights / 25-09-2020 / Bristol

Yesterday, the Chancellor of the Exchequer Rishi Sunak announced the Treasury’s new Job Support Scheme, which will replace the Coronavirus Job Retention Scheme, also known as the 'Furlough Scheme', which will come to an end on 31 October.

The Government have said that the aim of the scheme is to help protect viable jobs in businesses which are facing lower demand due to Covid-19.

How does it work?

The Government will subsidise the wages of people who are in work but working shorter hours.  

Which businesses are eligible?

All employers with a UK bank account and a PAYE scheme. You do not need to have previously made use of the Coronavirus Job Retention Scheme.

However, larger companies will be required to meet a financial assessment test to show that turnover is lower now than before experiencing difficulties due to Covid-19.

Which employees are eligible?

Employees must have been on the PAYE payroll and a Real Time Information submission made in respect of that employee on or before 23 September 2020. The employee does not need to have previously been furloughed under the Job Retention Scheme.

How many hours must employee work?

The employee must work at least 33% of their usual hours. Each period of short working must be at least one week. After the first three months of the Scheme, the minimum working hours may be increased.

How much will the Government pay?

For each hour (of usual hours) not worked, the Government will pay one third of the usual hourly wage for that employee. The Government’s contribution will be capped at £697.92 per month.

How much must the employer pay?

The employer must pay for hours worked plus one third of the usual hourly wage for hours not worked. The employer must also pay employer National Insurance contributions (NICs) and pension contributions.

Therefore an employee working 33% of their hours will receive 77% of their normal pay (subject to the cap on the Government’s contribution).

Can employers top up the employee’s wages to 100% of normal salary?

Initial guidance from the Government suggests employers will not be permitted to top up employees’ wages to 100% of normal wages whilst claiming under the Scheme.

Can an employee be made redundant whilst on reduced hours?

Businesses will not be able to claim for an employee’s wages under the Scheme if they are working their notice period due to redundancy.  

How long will the scheme be open?

It will last for six months, from 1 November 2020 until the end of April 2021. 

How do I place an employee on reduced hours?  

Employees will need to agree to working reduced hours and receiving reduced pay. We would suggest ensuring their agreement is recorded in writing.

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If your business requires any assistance navigating the end of the Coronavirus Job Retention Scheme, making use of the Job Support Scheme, or with any other employment-related issues, please do not hesitate to contact our Employment team.