Covid-19 Business Support
As you will no doubt be aware a new Job Support Scheme was announced yesterday to replace the Job Retention Scheme (Furlough) that ends at the 31st October 2020.
We have detailed below the main points about the scheme and I useful table that highlights the cost to the employer based on the hours worked by the employee.
- The scheme will open on 1 November 2020 and run for 6 months, until April 2021.
- Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
- All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
- Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020
- In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.
- Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.
- The government contribution will be capped at £697.92 per month.
- The grant will not cover Class 1 Employer NICs or pension contributions, these contributions will remain payable by the Employer.
- For the time worked, employees must be paid their normal contracted wage and for the time not worked, the employee will be paid up to two-thirds of their usual wage. ( not the reduced furlough amount of 80%/70%).
- Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.
- Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
- The claim will be made online and if we have been making your claims we will continue to do so for you the first claim cannot be made until December 2020 as you will be paid in arrears.
The table below then highlights the cost to the employer depending on the number of hours worked by the employee. You then need to also bear in mind the additional costs of Employers NIC and Pensions as you will also need to continue to meet those.
|Hours Employee Worked||33%||40%||50%||60%||70%|
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||78%||80%||83%||87%||90%|
|Gov’t Grant (% of normal wages)||22%||20%||17%||13%||10%|
|Employer Cost (% normal wages)||55%||60%||67%||73%||80%|
Obviously this is new guidance and may be subject to changes.
Government advice is regularly changing. Follow the link below for the latest update:
Johnstone Howell & Co.
25 September 2020