Job Support Scheme
This article was last updated on 13 October at 17:25.
Further guidance was subsequently published on 9 October regarding the expansion of the Scheme for businesses whose premises have been legally required to close as a direct result of COVID-19 restrictions, as determined by one of the four UK governments. The comments below consider how the Scheme will apply to both ongoing and closed businesses, with specific comments made towards the end of this article as they relate to the extension of the Scheme.
Under the Scheme the employer will continue to pay its employees for the time worked, and the Government and the employer will pay a third of the hours not worked each. The Government’s contribution will be capped at £697.92 per month.
The Scheme will run for six months, until April 2021.
Eligibility – the employer
All employers with a UK bank account and a PAYE scheme can claim under the Scheme.
An important point to note is that there is no requirement for either the employer or the employee to have previously used CJRS. This will prove invaluable for employers who are trying to preserve jobs.
Under the Scheme large businesses will be required to meet a financial assessment test. Only those businesses whose turnover is lower due to the impact of the pandemic will be eligible to benefit from the Scheme.
Any large business who benefits from the Scheme will not be able to make capital distributions, such as the payment of dividends or share buyback arrangements.
Eligibility – the employee
Any employee must be on the employer’s payroll on or before 23 September 2020.
Employees must work at least 33% of their usual hours. After three months, the Government will consider increasing the minimum working hours threshold.
There is scope to rotate employees on and off the scheme, without the requirement to work a similar work pattern each month, however each working period must be for a minimum period of seven days.
How will the scheme work?
Whilst full details of the Scheme are awaited, we are aware of the following:
- For every hour not worked by the employee, both the Government and employer will pay a third of the usual hourly wage for that employee each.
- Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution.
- Unlike the initial phase of CJRS, the Government will not be contributing towards the Class 1 employer’s National Insurance contributions or pension contributions. These remain the responsibility of the employer.
- A similar methodology used under CJRS will apply when determining how to calculate the hours which will be supported under the Scheme.
- Employers must pay employees their contracted wages for the hours worked. The Government and employer are both contributing towards the contracted hours not being worked.
- The employee must be working at least 33% of their usual contracted hours.
- The employee must be paid their normal contracted salary.
- Under the Scheme the employee will be paid two-thirds of their usual salary.
- Employees cannot be made redundant or put on notice of redundancy during the period when their employer is claiming grant payments under the Scheme.
Job Support Scheme for closed business premises
Following the announcement of the Scheme, the Government announced an extension to provide support to businesses who are required to close as a consequence of tighter local or national restrictions across the UK.
The main features concerning the level of support being extended to businesses is set out earlier in this article. The extension to the Scheme will support any business that is required to close its premises, which includes restriction to deliver and collection only services from those premises. The extension will only apply to businesses legally required to close their premises as a direct consequence of local or national restrictions.
The extension to the Scheme will not apply to any of the following businesses, even though they will potentially be affected by further lockdown restrictions:
- Businesses that are legally able to stay open but whose trade is significantly affected by any lockdown restrictions. Examples include suppliers to pubs, restaurants and hotels.
- Businesses that are able to remain open but where demand for their services is reduced, for example theatres and cinemas.
- Where a business decides to close owing to a decline in demand owing to the impact of COVID-19.
- Where a business is closed by a local public health authority owing to a specific workplace outbreak.
Claims under the Scheme will relate to any employee who has been instructed to cease work because of the closure of the business.
The extension of the Scheme will, as previously mentioned, follow the same rules as the initial version of the Scheme. Where any local or national restrictions are lifted, with the business re-opening, any small or medium sized businesses can still claim under the Scheme where they are facing a reduction in the demand for their services.
Details as to how employers will be able to claim payments under the Scheme, together with more technical information, are awaited.
Employers will be able to claim payments from December 2020. The payments will be payable in arrears.
HMRC issued over 27,000 letters to employers who they believed had claimed support under CJRS to which they were not entitled to receive.
HMRC will undertake checks on claims made under the Scheme and will seek to recover any overstated or fraudulent claims. Furthermore, they will check the short-term working arrangements of employees to ensure compliance with the Scheme.
We recommend that even where an employer has not been contacted by HMRC regarding the claims submitted they should review the claims made. Where any errors have arisen, seek professional advice as to how they should be resolved.
If you wish to discuss the matter further, please contact Nick Bustin, Director of Employment Tax, on 07515 795 186 or via email email@example.com.