Rishi Sunak’s Jobs Support Scheme explained

Update 17/12/20:

With the announcement of a 4-week national lockdown in England, the Chancellor has decided to extend the Job Retention Scheme (Furlough) until 30th April 2021. Under the scheme, employees can receive 80% of their current salary for hours not worked, up to a maximum of £2,500 per employee per month. The extension of the scheme means the new Jobs Support Scheme, which was due to start 1st November, has now been postponed.

When will the Jobs Support Scheme start?

Following the recent announcement of the extension of the furlough scheme on 31st October, the successor Jobs Support Scheme has been put on hold until the extended furlough scheme comes to an end.

How will the Jobs Support Scheme work?

The Jobs Support Scheme will support employers who are facing lower demand due to the pandemic. Through the scheme, employees will receive a minimum of 73% of their usual wages, whilst working fewer hours.

How contributions work in practice

If an employer finds that due to the pandemic they have lower demand, they can enroll employees on the scheme. They can then reduce the number of hours they work, whilst ensuring they continue to get a minimum of 73% of their usual wages.  

Employees must work at least 20% of their usual hours to be eligible.For the remaining 80% of their usual salary, the Government will pay 61.67% and the employer will pay 5%. An example of this would be:

• Employee works 20% of their usual hours and receives pay as normal
• Of the remaining 80%, the employer pays 5% and the Government pays 61.67%
• Total = 73% of usual wage

The Government contribution for each employee is capped at £697.92 a month

It’s important to note, employers will still be required to pay pension and employers National Insurance contributions on behalf of the employee. Employees on the scheme cannot be made redundant, or be put on notice of redundancy during the period that the employer is claiming the grant for their employee. Calculations must be based on an employee’s normal contracted wage. However, employers are also able to use this scheme in conjunction with the Job Retention Bonus payment that was previously announced, if they meet the eligibility criteria for it.

What about businesses forced to shut by law because of coronavirus restrictions?

In addition, the Chancellor has announced extra measures for those businesses that are forced to close due to local restrictions. If employees are unable to work for a week or more, they will be entitled to two-thirds of their normal salary. The Government will cover 100% of these costs.

Am I eligible for the Jobs Support Scheme?

There are two different sets of eligibility criteria for both employers and employees.

For employers

Any employers with a UK bank account and UK PAYE scheme are eligible for the Jobs Support Scheme. You and your employee don’t need to have previously used the Coronavirus Job Retention Scheme to access this new grant.

SMEs are not required to meet any financial assessment to access the scheme. However, large businesses (usually defined as those with over 250 employees or more) can only apply for the scheme if their turnover has fallen significantly due to the pandemic. These businesses will be required to meet a financial assessment and provide evidence that their sales have been materially affected.

For employees

Employees enrolled on the scheme will need to have been on the employer’s payroll, with HMRC’s knowledge, the month before the scheme starts, to be eligible.

Employees can cycle on and off the scheme, and are not required to work the same pattern every month, but each time their hours are reduced on the scheme, it has to cover a minimum period of 7 days.

How to apply for the Jobs Support Scheme

It has currently not been made clear how employers can apply for the Jobs Support Scheme. However, many suspect that it will likely follow a similar process as the furlough scheme and you will need to contact HMRC for a grant. Employers must agree these new hours with their staff, make any changes to the employment contract from that agreement and notify the employee in writing.

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