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In his Winter Economy Plan, chancellor Rishi Sunak confirmed that he would not extend the Coronavirus Job Retention Scheme (Furlough Scheme) beyond the end of October. Instead, from 1 November, the government will be offering a reduced level of support via a new Job Support Scheme.

Since the chancellor’s announcement, the government has published fuller details of the Job Support Scheme. In essence, if you put an employee on reduced hours, government will pay a third of the hours that they don’t work. For the benefit of clients who are employers, we’re using this post to explain who’s eligible for the scheme and how it works.

Am I an eligible employer?

All employers with a UK PAYE scheme and UK bank account are eligible.

There will be no financial assessment for SMEs. However, large businesses have to meet such a test, confirming that their turnover is lower now than before COVID-19 made a negative impact.

Which employees are eligible?

To be eligible, an employee must:

  • Have been on your payroll on or before 23 September 2020
  • Work a minimum of 33% of their usual hours (this threshold may rise after 3 months, but this has yet to be confirmed)

Employees don’t have to work the same pattern each month, but each ‘short-time working arrangement’ must last for at least seven days.

What are the ‘reduced hours’ rules, rates and arrangements?

If an employee is working at least one-third of their normal hours, you must pay them their normal wage for the time they do work. For the time they don’t work, government will pay up two-thirds of their usual wage (up to a maximum of £697.92 per month). The grant does not cover Class 1 employer NICs or pension contributions – you need to pay these in full.

It’s also important to note that you are not allowed to make employees redundant or give them notice of redundancy while you are claiming a grant for their wages.

Examples of Job Support Scheme grants

In its guidance, the Government publishes a version of this table to indicate how much grant is payable when an employee works different proportions of their normal hours.

Hours worked (%)3340506070
Hours not working (%)6760504030
Employee earnings (% of normal)7880838790
Govt grant (% of normal wages)2220171310
Employer cost (% of normal wages)5560677380

 

How do I claim Job Support Scheme grants?

You will be able to claim online via Gov.uk from December 2020. Grants will be paid in arrears. In other words, you need to pay the employee first and report that payment to HMRC via an RTI return.

HMRC intends to check claims thoroughly, so be sure to get your calculations right – otherwise it could hold up payment of the Job Support Scheme grant. If you have any questions at all about the scheme, please talk to your account manager at THP.

 

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About Jon Pryse-Jones

Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.

An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”

Jon’s appreciation for THP extends to his fellow team members and the board.  “They really know how to run a successful business,” he says.  He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.

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