COVID-19 Job Support Scheme – What We Know
What is the scheme?
The Job Support Scheme’s goal is to provide support to UK businesses facing lower demand over the winter months. Its aim is to assist in keeping employees attached to the workforce.
How does the scheme work?
The scheme results in a contribution from three parties – the employee, the employer and the government.
Employees seeing a cut in hours will receive full pay for hours worked, but only two thirds pay of the hours not worked.
Employers will pay in full for the hour’s employee’s work, and also pay a third of the unworked hours.
The government will pay employers a third of the unworked hours.
This is best explained in an example:
Employee A works for Employer B, which has seen reduced demand and therefore is cutting staff hours.
Employee’s Perspective
Employee A has seen their hours reduced from 36 hours per week to 12 hours per week. Their hourly rate is £10 per hour.
Employee A will be paid the following:
12 hours @ £10 per hour: £120
16 hours (this being 2/3rds of the 24 hour reduction in weekly hours) @ £10 per hour: £160
Total pay for the week: £280
Employers Perspective
Employer B will pay for the following:
12 hours @ £10 per hour: £120
8 hours (being 1/3rd of the 24 hour reduction in weekly hours) @ £10 per hour: £80
Gross wage burden for the employer: £200
Employers NI and Employers Pension contributions are also payable by the employer on top.
Governments Perspective
The government will provide a grant of £80, being 1/3rd of the 24 hour reduction in weekly hours.
The government contribution is capped at £697.92 a month
What are the qualifying conditions?
Here are the conditions we know so far:
Employees must be on an employer’s PAYE on or before 23 September 2020. This means a Real Time Information submission notifying payment to that employee to HMRC must have been made on or before September 23 2020.
Government contributions will be capped at £697.92 a month per employee.
For the first 3 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 the minimum hours’ threshold.
Employees will be able to cycle on and off the scheme and do not have to work the same pattern. Each short time working arrangement must cover a minimum period of seven days.
All employers with a UK bank account and UK PAYE schemes can claim the grant, neither the employer nor employee needs to have used the Coronavirus Job Retention Scheme prior to be eligible.
Large businesses will have to meet a financial assessment test, proving that turnover is lower now than before due to COVID-19. There will be no financial assessment for small and medium sized businesses. If you are unsure as to whether or not you are a large entity do not hesitate to contact us.
The government’s expectation is that large employers using the Job Support Scheme will not make capital distributions such as dividends or share buybacks whilst accessing the grant.
Employers using the Job Support Scheme will also be able to claim the Job Retention Scheme if they meet the eligibility criteria.
Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant.
How are claims made?
The scheme will be open from 1 November to 30 April 2021.
Claims will be made online through the gov.uk website from December 2020.
Claims will be paid on a monthly basis, in arrears. This means a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and the payment has been reported to HMRC via an RTI return.
HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or incorrect.
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.
HMRC expect that employees will be informed directly of the full details of claims.
More detail will be released in the coming days, should you have any concerns do not hesitate to contact us.
Andrew Douthwaite
Manager
Hamlyns LLP
E: andrew.douthwaite@hamlyns.com
Based in Woking, Hamlyns is a different kind of Chartered Accountants. We provide accounts, audit and tax services to a number of businesses and individuals across Surrey and the UK.
