The Job Support Scheme
HM Treasury has published a factsheet to explain how the new Job Support Scheme, that was announced by the Chancellor of the Exchequer on 24 September, will work.
The new scheme will replace the Coronavirus Job Retention Scheme (”CJRS”) after that ends on 31 October, and will run for 6 months from 1 November.
Under the new scheme, employers will continue to pay employees for time worked but the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction). Employers are to be liable for all employer’s national insurance contributions and pension contributions, including on the element of the wages funded by the State.
The Government will pay a third of hours not worked up to a cap of £697.92 per month, with the employer also contributing a third. This will mean that employees will receive 77% of their normal wages, where the Government contribution has not been capped.
The factsheet states “Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense”. It seems odd that employers will be prohibited from making higher payments to employees at their own expense if they are to access the scheme, so query whether this comment was intentional and, in any event, whether it will stand.
The scheme will only apply in respect of employees who are working at least 33% of their usual hours and who were on the employer’s PAYE payroll on or before 23 September. 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. Employees will be able to go on and off the scheme and do not always have to be working the same pattern, but each short-time working arrangement must cover a minimum period of 7 days.
Eligible employers will be able to use the scheme irrespective of whether they have previously furloughed employees under the CJRS. Employers who have utilised the CJRS will still be able to claim the Job Retention Bonus in respect of employees who are subject to the new scheme, if the eligibility criteria are met.
Unlike the CJRS, the new scheme will not be open to all employers. All small and medium sized enterprises (“SMEs”), usually defined as businesses with up to 250 employees, will be able to access the scheme, but larger employers will only be eligible if their turnover has reduced as a result of the pandemic. Further, larger employers who access the scheme will be prohibited from paying dividends to shareholders. This goes some way to addressing a criticism of the CJRS that it benefited some businesses which continued to generate strong profits.
A further criticism of the CJRS, from some quarters, was that it can be utilised in respect of employees who are being made redundant in order to fund notice pay. In contrast, employers will not be able to give employees notice of redundancy while claiming under the new scheme.
The factsheet makes the point that “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”. Some employers will already have short-time working provisions in place upon which they will be able to rely in order to apply the scheme – but most will not. Those who do not already have short-time working provisions who wish to utilise the scheme are encouraged to obtain our advice in order to protect against such claims as for failure to consult collectively (where 20+ employees are affected at one establishment), breach of contract, unlawful deduction from wages and unfair dismissal.
The factsheet states that more detailed guidance will be published shortly.