Club Insure Risk Management’s Senior HR Advisor, Ben Crawford, talks about the extension to the Job Support scheme.
Rishi Sunak has announced an extension to the Job Support scheme, which will start operating from 1st November and is due to last for six months.
The announcement made recently means that the government will pay up to 67% of the wages of employees whose businesses have been forced to shut as a result of government-imposed coronavirus restrictions.
The scheme will only apply to those who are forced to close, as opposed to those who choose to close. It is believed that the government grants will be capped at a maximum of £2,100 per employee per month.
In addition to the support of employees’ wages, Sunak announced an increase in business grants for businesses who are forced to shut, with up to £3,000 a month paid every fortnight.
To recap, here is the information from our previous update on the Job Support Scheme:
To qualify for the JSS, employees must be working at least 1/3 of their normal hours and their employers should pay the individual hours. The government will then pay up to 1/3 of the hours not worked and the employer will have to pay 1/3 of the hours not worked, meaning employees will receive at least 77% of their usual full pay.
So, for example, for someone on £2,000 a month working half their hours, they’d get £1,000 plus £333 extra from their employer and £333 from the government. The level of grant will be calculated based on the employee’s usual salary, capped at £697.92 per month.
All small and medium businesses will be eligible for the scheme. Larger employers will be able to claim through the scheme if they can show decline in revenues due to the effects of Coronavirus, and further information will be released on this.
Prior to the 1st November, if companies are looking to get people to move onto the short time working and Job Support Scheme, they need to have the conversation with the employees and then seek their agreement.
We are still awaiting further guidance, but some extra information that has come out is as follows:
- Large businesses will have to meet a financial assessment test in order to qualify for the scheme
- Large employers will not be making capital distributions, such as dividend payments or share buybacks whilst accessing the grant
- Employees must have been on the PAYE on or before 23rd September
- For the first three months, employees must be working at least 33% of their normal working hours, after this three month period, the government will consider whether to increase this threshold
- Employees will be able to go on and off the scheme and do not have to work the same working pattern each month, but each short time working arrangement must cover a minimum seven day period
- Government contribution capped at £697.92 a month
- Grants to be paid in arrears and will not cover NICs or pension contributions and these will remain payable by the business
- Employees cannot be made redundant or put on notice during the period where the employer is claiming the grant for that employee
The Chancellor announced further support for businesses and set out four ways in which this could be done:
- Bounce back loans – the chancellor announced a ‘Pay as you grow’ scheme with loans to be extended by between 6-10 years. Interest only payments will be allowed, and businesses will be able to suspend repayments for up to 6 months.
- Other loans scheme such as the Coronavirus Business Interruption loans – the government have extended the government guarantee for up to 10 years. The deadline for these loans has been extended until the end of the year.
- More flexibility on tax bill payments – Companies will be allowed to spread VAT over 11 smaller payments rather than 1 large payment and this will be interest free.
- Hospitality and Tourism – VAT was due to increase back to 20% for businesses in this area, however this will now remain at 5% until 31st March 2021.
We have produced a ‘Seeking the agreement of employees to enter the job support scheme’ template letter, which is free to access. Please contact your Account Executive for more information.