A new Job Support Scheme will replace the Coronavirus Job Retention Scheme (Furlough Scheme) when it ends, at the end of October.
Under the new scheme, the government will contribute towards the wages of employees who are working fewer than normal hours due to decreased demand. Further guidance will follow but key points of the scheme are as follows.
The scheme will run for six months from 1 November 2020 and will be open to businesses across the UK even if they have not previously used the furlough scheme.
All SMEs are eligible to use the scheme. Larger businesses will have to meet a financial assessment test to demonstrate that the turnover of their business has been adversely affected by COVID-19. The government expects that large employers will not be making capital distributions such as dividends or share buy backs, while using the scheme.
Employees need be on the employer’s PAYE payroll on or before 23 September 2020.
Employees will need to work at least one third of their normal hours, which will be paid by their employer as normal, at the employee’s normal rate of pay. The government will review the threshold of a third of normal working hours after three months.
The employer will pay the employee for a third of the hours not worked, and the government will pay the employee for a further third of these hours. So, in relation to any hours not worked, an employee will receive a total of two thirds of their pay. The employer will be reimbursed in arrears for the government contribution.
The level of grant from the government will be calculated based on the employee’s usual salary (and not furlough rate) but will be capped at £697.92 per month. The grant will not cover pension contributions or national insurance contributions which will be payable by the employer.
Employers and employees must agree the short-time working arrangements and any changes to the contract of employment need to be made by agreement and notified to the employee in writing.
The scheme will be flexible so employees can come on and off it, and can work different patterns, subject to a minimum short-time working arrangement period of 7 days.
To be eligible, employees must not be made redundant or be given notice of redundancy during the period in which the employer is claiming the grant.
Eligible businesses can use the scheme and can also claim the Job Retention Bonus for workers who have been furloughed and are kept on until the start of February 2021.
As with the furlough scheme, HMRC will be checking claims.
The government is also continuing its support for self-employed individuals by extending the Self Employment Income Support Scheme Grant.