Goodbye Job Retention Scheme, Hello Job Support Scheme
As of 31st October 2020, the Government’s current job retention scheme will cease. Currently employers can claim up to 70% of an employee’s wages who is on furlough subject to the salary cap.
However, last week the Chancellor announced a further scheme aimed to continue to assist employers and prevent unnecessary redundancies.
What is the new scheme?
- It will run for 6 months from the 1st November 2020;
- The Government will contribute to the wages of employees who are working fewer than normal hours due to decreased demand;
- Employees must have been on the payroll on or before 23rd September 2020;
- As with the current furlough scheme, employees can roll on and off, but each cycle must be at least 7 days;
- Employers will continue to pay for hours the employee works. For the hours not worked, the Government and the employer will each pay one third of their equivalent salary i.e. for the hours not worked the employee will receive the equivalent to two thirds of their normal salary for the unworked hours. For example:
Agatha works 5 days a week earning £250 per week (£50 per day). To avoid redundancy, she is reduced to 3 days per week.
Agatha’s employer pays her £150 per week for the three days she works.
With regard to the remaining £100, she will actually only earn 2/3rds of this i.e. £66.66. She will therefore earn a total of £216.66 per week. This is because the Government will pay £33.33 by way of the grant, and the employer is required to pay a further £33.33 under the scheme.
- Employees must work at least 33% of their usual hours. The level of the grant will be calculated on the basis of the employee’s usual salary capped at £697.92 per month;
- It is open to all employers even if they have not used the current furlough scheme;
- This is in addition to the Jobs Retention Bonus which will provide a one-off bonus payment of £1,000 for each employee retained through to the end of January 2021 and who was previously on the furlough scheme, please see the link for more information: https://www.gov.uk/government/publications/job-retention-bonus/job-retention-bonus
- Employers will be able to claim from December 2020 via Gov.uk.
Employers cannot make an employee redundant or place the employee at risk of redundancy during the period they are claiming the grant for that employee. Therefore, if redundancy is a risk, the employer will need to cease using the scheme.
For more information:
Please see the link below to the Government’s current fact sheet.
No doubt more information will be published in the near future. However, do not fear, here at WCL we can help you with your payroll enquiries and forward planning. If you need assistance with your payroll please contact us on 01225 585756 or [email protected]