The Government has recently announced a new Job Support Scheme which will replace the Coronavirus Job Retention Scheme when it comes to an end on 31 October 2020.
The purpose of the new scheme is to protect jobs in businesses that can offer employees at least 20% of their usual working hours, in the hope that demand will pick up in the coming months. At present, the scheme is due to finish at the end of April 2021 and only applies to those employees who have been on their employer’s payroll on or before 23 September 2020.
From 1 November 2020, where an employee is working at least 20% of their usual hours, their employer will be required to contribute a minimum of 5% of their pay for any hours not worked (up to a cap of £125 per month). The Government will then contribute 61.67% so that in total, an employee receives at least two thirds of their usual contractual pay for the hours they have not worked. The Government’s contribution will be capped at £1,541.75 per month.
Whereas large businesses will be required to satisfy a financial assessment to demonstrate that their turnover has decreased during the Covid-19 pandemic, all small and medium sized businesses using PAYE will be eligible to apply without assessment.
Employees cannot be made redundant (or put on notice of redundancy) during the period when their employer is claiming the grant, as the scheme is designed to protect viable jobs and support businesses that are likely to continue trading, but need more time for demand to pick up.
Any change to working hours or pay must be agreed with the employee, and a written record of the agreement must be kept by the employer and provided to HMRC on request.
Businesses that are required by law to close as a result of coronavirus restrictions will also be able to use the scheme. Where restrictions are in place and businesses have to close, the Government will fund two thirds of an employee’s usual salary up to a maximum of £2,083.33 a month.
Below is a factsheet prepared by HM Treasury with examples of how the scheme will work in practice.
This article is up to date as of 27 October 2020.