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COVID-19: Chancellor announces Job Support Scheme as part of Winter Economy Plan

On 24 September 2020, the Chancellor announced the Job Support Scheme that will run for six months from 1 November 2020.

An HM Treasury factsheet outlines how the Job Support Scheme will operate:

  • To be eligible, an employee must be on their employer's PAYE payroll on or before 23 September 2020 (meaning that a Real Time Information (RTI) submission notifying HMRC of payment to that employee must have been made on or before that date).
  • For the first three months of the scheme, an employee must work at least 33% of their usual hours. After three months, the government will consider increasing this threshold. Employees will be able to "cycle on and off the scheme" and will not have to work the same pattern each month, but each short-time working arrangement must cover at least seven days. Employees cannot be made redundant or given notice of redundancy during the period for which their employer is claiming the grant for them.
  • For time worked, employees must be paid their normal contractual wage. For time not worked, the employee will be paid up to two-thirds of their usual wage: for every hour not worked, the government and employer will each pay a third of the employee's usual hourly wage (the government's contribution being capped at £697.92 a month). The grant will not cover Class 1 employer NICs or pension contributions which will remain payable by the employer. Calculation of "usual wages" will follow a similar method to the Coronavirus Job Retention Scheme. Employees who have previously been furloughed will have their usual pay and/or hours used to calculate usual wages, not their furlough pay.

The Chancellor’s statement "our expectation is that employers cannot top up their employees' wages above the two-thirds contribution to hours not worked at their own expense" is unclear. It may acknowledge that employers cannot afford to do so but it may be a prohibition.

Employers must notify employees in writing of agreed short-time working arrangements and make such documentation available to HMRC on request. Grants will be payable monthly in arrears after payment to the employee has been made and reported via an RTI return. Claims can be made online through GOV.UK from December 2020.

Further detailed guidance is now awaited.

Lewis Holroyd, a Solicitor at Eaton Smith LLP, commented that “the Job Support Scheme is an interesting concept to help protect jobs after the Coronavirus Job Retention Scheme ends on 31 October 2020 and I am personally pleased to see the Government announce this initiative. The Job Support Scheme may present new challenges within the redundancy procedure (as employees using the Job Support Scheme cannot be made redundant) and the calculation of pay may be tedious and somewhat confusing. If an employer is considering making redundancies then they need to plan to do so as soon as possible and before the Job Support Scheme commences and there are advantages and disadvantages of using this new scheme.”

For further information and how the Job Support Scheme can be used to support employers and employees, please contact Irina Polyakova and Lewis Holroyd on 01484 821 300.

The self-employed will be assisted through the extension of the Self Employment Income Support Scheme (SEISS). For those currently eligible for SEISS and who continue to actively trade but face reduced demand, there will be an initial taxable grant worth 20% of average monthly trading profits, up to a total of £1,875, covering the period from November to the end of January 2021. A further grant, the level of which will be reviewed and set in due course, will be available for the period from February to the end of April 2021.