Employment Alert – Chancellor unveils new Jobs Support Scheme

28 Sep 2020

What’s happening?

The government is introducing a new Jobs Support Scheme through which it will top up the wages of employees who aren’t required to work their full hours due to the Coronavirus.

Following the Chancellor’s announcement to parliament, a factsheet has been produced to clarify the key points of the scheme.

 

Why is this important?

This Jobs Support Scheme will replace the furlough leave scheme from 1 November and will apply for a period of 6 months. The government’s hope is that it will minimise redundancies caused by a temporary downturn in work due to the Coronavirus.

Under the scheme, employees must work at least 33% of their normal hours and will be paid as usual for the hours worked. The government and the employer will each then pay a third of the wages for the unworked hours, with the employee forgoing payment of the remaining third. The government’s contribution will be capped at £697.92 per month for each employee.

Large employers will only be eligible if their turnover has decreased as a result of the Coronavirus. Small and medium sized employers will be eligible whether or not their turnover has fallen.

Much of the initial reporting of the scheme does not pick up the following key points from the government’s factsheet:

  • Employees cannot be made redundant or put on notice of redundancy during while they are claiming under the scheme.
  • Employees must be on the employer’s PAYE payroll on or before 23 September 2020 in order to qualify.
  • The government’s contribution will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
  • The “expectation” is that employers will not be able to top up their employees’ wages above the two-thirds contribution for hours not worked.
  • The altered working hours must be agreed with staff, and changes to employment contracts must be notified to the employee.

Further guidance to the scheme will be published by the government in due course.

What should you do?

  1. Take a breath! Although we have the key details of the Jobs Support Scheme, the full guidance is yet to be published and so the current details may change.
  2. Once the full guidance has been published, review this and consider whether the Jobs Support Scheme is suitable and appropriate for your business.
  3. If you do wish to utilise the scheme, you will need to consider what proportion of your employees’ normal hours (at a minimum of 33%) you will require them to work.
  4. The next step will be to agree the proposed working hours with your employees. This agreement must be notified to the employee in writing. To benefit from the scheme from its commencement, you will need to have this agreement in place by the beginning of November.
  5. Once the scheme is in operation, you should keep up date with the guidance as it develops, in order to ensure that you remain in compliance with the provisions of the scheme.

Author

Andrew Crudge

Associate