The Government has announced a new Job Support Scheme which will come into effect from 1 November and replace the existing Coronavirus Job Retention Scheme (“the CJRS”).
The Job Support Scheme, which will run for 6 months, aims to protect viable jobs and avoid the need for further redundancies where employers can offer reduced working hours.
Employers will continue to pay employees for hours worked, with the cost of any time not worked to be split between the employer, employee and Government.
The scheme will be open to all SME employers with a UK bank account and UK PAYE scheme with large employers having to meet requirements under a financial assessment. Only Employees who were on a PAYE payroll before 23 September 2020 will be eligible to join the scheme. For the first 3 months of the scheme, employees are expected to work at least 33% of their usual hours and this percentage will be reviewed and confirmed by the Government for the final 3 months.
How does this new scheme work?
The employer and the Government will pay one third of the employees usual hourly pay each for every hour not worked, with the payments from the Government subject to a monthly cap of £697.92. Pay for hours not worked will not be topped up so employees working the minimum 33% of their usual hours will receive 77% of their pay. Employers are also required to pay National Insurance and Pension contributions.
Government contributions will be paid in arrears and employers will be able to make a claim through Gov.uk from December.
It is important for Employers to note that employees cannot be made redundant or put on notice of redundancy during a claim period and also that as with any variation to working arrangements, the reduced hours and pay under the Job Support Scheme must be agreed and documented. This is even more imperative as any such agreement to vary working arrangements must be made available to HMRC upon request.
What about the existing CJRS scheme?
The CJRS changed again on 1 October 2020 for a final time and will come to an end on 31 October 2020. These final changes mean that Government assistance under the Scheme has decreased even further with the contribution set to reduce from 70% to 60%. In addition, the salary cap has decreased from £2,817.50 to £1,875.00. Employers are required to ensure that employees continue to receive at least 80% of their pay under the Scheme and will now be expected to pay the 20% difference, on top of the National Insurance and pensions contributions.
If you are an employer and would like to discuss the schemes and options for business reorganisation including redundancy or exit packages, or an employee who would like detailed guidance regarding your pay entitlements under the schemes or exiting your employer, please do not hesitate to get in touch with a member of our experienced Employment team on 01484 558060 or email gareth.dando@ramsdens.co.uk .