Legal

The latest on how the job support schemes will work

29 Oct 2020 By Melanie Lane and Tracey Marsden

Melanie Lane and Tracey Marsden outline the differences between the two types of funding, including new detail on eligibility and penalties for non-compliance

Replacing the coronavirus job retention scheme, the job support scheme will come into effect on 1 November and will continue for at least the next six months. It is split into two parts: the job support scheme open – for businesses that remain open – and the job support scheme closed – for businesses required to close because of coronavirus restrictions as part of the government’s three-tier system. Here’s a summary of the latest detail on how both will work:

Job support scheme open

Provided an employee works a minimum of 20 per cent of their usual hours and the employer continues to pay them as normal for those hours, the government will contribute 61.67 per cent of their pay (subject to a cap of £1,541.75 per month), and the employer will have to contribute only 5 per cent of their pay (subject to a cap of £125 per month) for their unworked time. This means employees will receive at least 73 per cent of their normal pay provided they earn no more than the reference salary of £3,125 per month. 

The guiding principle of this scheme remains to protect ‘viable’ jobs. To qualify as a viable job, employees must work at least 20 per cent of their normal hours. For a full-time employee, this means they need to work at least one day each week. 

All SMEs and charities are automatically eligible. Large employers, now confirmed as those with 250 or more employees, will have to meet a ‘financial impact test’ to be eligible for a grant – they must be able to demonstrate that their turnover has remained the same or has fallen because of coronavirus before they make their first claim. 

For employees who are paid a fixed salary, the reference salary for the purposes of the job support scheme claims is the greater of the wages payable to the employee in the last pay period ending on or before 23 September 2020, and the wages payable to the employee in the last pay period ending on or before 19 March 2020. For employees whose pay is variable, the reference salary is the greater of the wages earned in the same calendar period in the tax year 2019 to 2020, the average wages payable in the tax year 2019 to 2020, and the average wages payable from 1 February 2020 until 23 September 2020.

Job support scheme closed

The job support scheme closed is essentially a remodelled version of the furlough scheme. Where an employee cannot work because of an employer’s obligation to close their premises as a result of coronavirus restrictions, they will be entitled to two-thirds of their normal pay from their employer, which will be fully funded by the government, up to a cap of £2,083.33 per month. Organisations that are fully funded by the government are not expected to use this scheme, although those partially funded by the government may do so if their business is adversely affected. 

Employees will be able to undertake voluntary training in their non-working hours, in respect of which they will be entitled to be paid at least the national minimum wage. It is not currently clear if employees can take up other paid employment. Employers that claim under the scheme will still be eligible for the job retention bonus for the same employees.

The government’s policy paper on this scheme makes clear that a business cannot make an employee redundant or serve them with notice of redundancy while claiming for them under the scheme. Penalties of up to 100 per cent of any amount over-claimed may be applied, and HMRC will consider publishing the details of employers charged a penalty because of a deliberately incorrect grant claim. 

Regarding as yet unanswered questions, on holiday and other benefits, we anticipate statutory holiday will continue to accrue on the basis of normal hours. We also await clarification on how the job support scheme will work in the context of those who are self-isolating, shielding or on other leaves of absence. 

For many businesses, these new financial interventions are welcome news. However, the job support scheme doesn’t cater for those employers not forced to close by the government but rather because of a lack of trade. 

Melanie Lane and Tracey Marsden are employment partners at CMS

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