This post is based on legislation published on 27th October 2020, further guidance is expected by the end of October.
What is it?
With the furlough scheme coming to an end, the Job Support Scheme has been designed to give support to employers who are still experiencing reduced demand due to COVID19.
The scheme is open from 1st November 2020 to 30th April 2021.
There are two distinct arms to the scheme:
For employers that are experiencing reduced demand. Under this arm HMRC will reimburse 61.67% of an employees usual hours that are not worked, capped at £1,541.75 per month.
For employers that are legally required to close their premises as part of government coronavirus restrictions. Under this scheme HMRC will reimburse 66.67% of their normal pay with no obligation on the employer to top up an employees pay. This is capped at £2,083.33 per month.
Full details can be found on the following link:
Who is eligible?
Both open and closed scheme
Any UK employer that have enrolled for PAYE and have a UK bank account.
- Large employers with over 250 employees are eligible if they pass a financial impact test.
- All employers must have employees that are working at least 20% of their normal hours.
To be eligible for the closed scheme one or more business premises must be legally required to close as a result coronavirus restrictions set by one of the four UK governments. Claims can only be made for the period in which restrictions are in place.
Which employees can you claim for?
Both Open and Closed Scheme
To qualify for the scheme employees must have been on the payroll and on a RTI submission that was submitted between 6th April 2019 and 23rd September 2020.
Employees must have been your employment on 23rd September 2020. Claims can be made for employees that left after 23rd September 2020 and were re-hired.
Claims can only be made for employees whose primary work place is at the premises that has been forced to closed due to the restrictions above and for those that have been instructed to cease work for 7 days or more.
What paperwork do I need to keep?
To be eligible for the grant a written agreement must be reached. This needs to be retained for at least 5 years and made available to HMRC on request.
We recommend that you seek HR advice.
What are the conditions to making a claim?
For all schemes:
- You cannot claim for an employee that who has been made redundant or is service contractual or statutory notice
- Large employers are not expected to pay capital distributions such as dividends while claiming under the scheme.
- The employer is still responsible for National Insurance and pension contributions and these must be paid over to HMRC, it is therefore likely that grants will be held if payments are outstanding.
- The grant will only cover payments already made to employees (so unlike the Job Retention Scheme this grant is paid in arrears).
How much can I claim?
61.67% of an employee’s usual hours that are not worked, capped at £1,541.75 per month.
66.67% of an employee’s normal pay with no obligation on the employer to top up an employees pay. This is capped at £2,083.33 per month
How do I claim?
There will be an online portal available from 8th December further details will follow.
Can Directors Claim under the scheme?
The legislation that is published at the time of writing on 27th October 2020 is not clear. So we are awaiting legislation due at the end of October to
Do we still qualify for the Job Retention Scheme Grant?
Yes, providing the employees gross pay averages more than £520 per month between 6th November 2020 and 5th February 2021. The amounts claimed under this scheme are part of the gross pay.
Do I have to pay the additional 33.3% for unpaid hours?
No, and but you can top up.
Do I have to pay minimum wage?
Minimum wage only applies to the hours that the employee is working. If training is undertaken during hours not worked then a top up must me made so that minimum wage is covered in these hours.
What about employees on an hourly rate or zero hour contracts?
These employees are eligible under this scheme the earnings and hours are based on:
- the wages earned / hours worked in the same calendar period in the tax year 2019 to 2020
- the average wages / hours payable in the tax year 2019 to 2020
- the average wages / hours payable from 1 February 2020 (or the employee’s start date if at later) until 23 September 2020
What about employees that aren’t working at least 20% of their hours?
No claim can be made under this scheme.
Can I claim for employees on maternity?
No, their reason for absence from employment is parental leave but they can be put on this scheme once they return to work.
Can I furlough employees that are off sick?
No, their reason for absence from employment is sick leave but they can be put on this scheme when they return to work.
Do I still have to pay tax or NIC?
Yes, payroll still must be run as normal, with tax NI and pensions applied. If you are struggling to make the payment to HMRC you can contact them on the time to pay helpline.
Do I have to repay the money bank to HMRC?
No, it is a form of grant to is not repayable.
Is the money taxable?
Like most grants the income is taxable, but then tax relief is given on the expenditure i.e staff costs.
Can employees take an additional work?
This is not clear in the initial legislation.
Does holiday pay accrue?
Yes, as employees still have the same employee rights as before