From November 1st 2020, the existing furlough scheme in the UK will be replaced by the new Job Support Scheme. This is to help to support companies that need to close because of local lockdowns or companies that have restricted working hours.
The scheme will run for 6 months and there is no deadline for employers to apply for the scheme, with all small and medium sized businesses being eligible, which is usually defined as turnover of less than £25 million, under 250 employees and gross assets of less than £12.5 million, but the government should be providing more guidance.
Lockdown Job Support Scheme
An extension to the Job Support Scheme applies to business that have to shut down fully or partially, by law in a local or national lockdown. Partial lockdowns mean that employers can only use the scheme for employee’s that can’t work, but can still continue to pay members of staff that are still working normally.
- If a business has to close for at least 7 days, the state will cover 67% of an employee’s wages.
- Employees must be off work for seven consecutive days to qualify.
- Employers will cover National Insurance and pension contributions.
- Employees can’t work for the employer during this time.
- The government will pay an employer 67% of an employee’s salary, up to a maximum £2,100/mth. An employer can top up wages if they want to.
For companies that are facing reduced demand, the Job Support Scheme works in the following way:
For an employee to be eligible for the Job Support Scheme they must have been on the employer’s PAYE payroll on or before 23 September and be working at least one fifth of their working hours and employees cannot be on a redundancy notice to be eligible. Employees will be paid in full for by their employer for that time.
For the hours that an employee cannot work, employers will pay 5% of the employee’s wages in full and the rest will be split. 62% will be paid by the government, capped at £1,542/mth and the final third will be lost. Therefore, in combination, the employer and state will cover two thirds of an employee’s wages.
For employees that earn less than £37,500 and work a minimum 20% of their hours, they should take home at least 73% of their usual pay. An employee will take home more if they work over 20%.
If employees earn over £38,000 then the £697.92/mth cap will be in place and employees can earn less than 77%, depending on employer contributions and on how much they earn.
Employees on zero-hours contracts and irregular hours will be eligible, but the government will publish more detail on variable working hours.
The new Job Support Scheme is open to employers that previously used the furlough scheme and employers that didn’t too. It will not cover National Insurance and pensions contributions and they will still need to be covered by the employer, which is different to the Furlough Scheme.
Employers can go on and off the scheme, so if employees work different work patterns then this can be accommodated, short-time working arrangements must cover at least 7 days though.
On the Furlough Scheme, some overtime and commission were covered, but the government will be publishing more advice and guidance on whether the Job Support Scheme will do the same if it’s part of an employee’s regular contractual pay.
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