In a bid to help employers during the Covid-19 pandemic, the Government has just announced its latest Scheme which will replace the current Furlough Scheme. The Job Support Scheme is designed to assist employers who might face a decrease in turnover during the next few months and should help reduce the amount of redundancies that could otherwise need to be made.
The Scheme will commence on 1 November 2020 and will run until the end of April 2021. Employers will be able to begin submitting claims from December 2020 and government payments will be paid to employers monthly in arrears.
All SMEs with a UK bank account and PAYE scheme will be eligible for the Scheme, regardless of whether or not they took advantage of the Furlough Scheme.
Large business will need to undertake a financial assessment test and must prove that their turnover has fallen (by at least a third) during the pandemic, however SMEs are exempt from this requirement.
Employers who are unable to offer their employees at least 33% of their usual hours will unfortunately not be eligible.
In order to make a claim, the employee must have been on the company’s payroll on or before 23 September 2020 and for the first three months of the Scheme, they must work at least 33% of their usual hours. This level is subject to change so employers should keep an eye out for the latest guidance.
The employer is expected to cover the cost of the employee’s wages whilst they are working (so at least 33%) however, for the hours that the employee is not working (which could be up to a maximum of 66% of their usual working pattern), the Government and the employer will each pay a third of the usual hourly wage. The Government’s contribution per employee will however be capped at £697.92 per month.
As with the furlough scheme, HMRC will be keeping a close eye on employers to ensure that they are claiming the correct amount. Any payments made under a fraudulent or incorrect claim will need to be repaid.
Employers who decide to take advantage of the Scheme will still be able to claim the Job Retention Bonus providing they meet the required eligibility criteria.
Previously, employers could use furlough payments to assist with redundancy notice pay. However, the Government have advised that under the current Scheme, employees must not be working through a notice period for redundancy and they will therefore not contribute to redundancy payments.
As the Scheme will involve a variation to an employee’s contract, employers should ensure that they receive in writing authorisation from the employee to vary the terms.
If you require assistance with drafting amendments to an employee’s contract or advice on any of the above, then please call the team on 01752 663295.