At the end of this month, the Coronavirus Job Retention Scheme (CJRS) will come to an end. This is the scheme that gave businesses funding to pay employees on furlough. From November, the new Job Support Scheme (JSS) will take over, running for 6 months until 30 April 2021. This new scheme is designed to help businesses employ people on shorter hours rather than making them redundant.
This is what we know so far about the scheme:
- It’s open to any business, whether or not it furloughed any employees under the CJRS
- The scheme will top up employee pay so that they receive at least 78% of what they would normally be paid.
- Employers must provide work (and pay) to the employee for at least 33% of their normal working hours and pay a third of the unworked time.
- For the unworked hours, the employer and the government each make a contribution of a third of the employee’s usual pay.
- The government’s contribution will be capped for each employee at £697.92 per month -so there is an implication for higher earners. The employer’s third is uncapped.
- Eligible businesses will still be able to claim the £1,000 grant per employee furloughed under the CJRS, providing they are still employed on 31 January 2021. This is called the Job Retention Bonus.
- In practice, businesses need to claim back the Government’s contribution from HMRC. Employers will make claims online through Gov.uk from December 2020 and will be paid monthly.
- A new addition to the JSS in light of the new three tier system is that a cash grant of £3,000 is now available for business forced to close. This sum does not need to be paid back.
An example of how it works
Sarah usually earns £2,000 a month. If she works 50% of her normal hours, she will earn £1,000 for the work done. PLUS, for the hours not worked, she would £333 extra from her employer and £333 from the government. So instead of earning £2,000, she will earn £1,666 – 83% of her usual monthly pay.
The overall purpose of the JSS is to protect jobs, by making it easier for companies to retain their staff as the pandemic continues to affect the economy. In the example above, the JSS saves the company £677 per month on Sarah’s salary, which could make her job more viable.
The more hours an employee works, the greater the proportion of normal salary they will receive, but the burden also increases for the employer, as shown in the table below:
What are the eligibility criteria?
For an employer…
- Small or medium sized (SME) companies (less than 250 employees and turnover of under £25 million) are automatically eligible for the scheme.
- Large businesses need to be able to demonstrate that they have been adversely affected by COVID-19.
For an employee …
- They must have been on PAYE payroll on or before 23 September 2020 and an RTI (furlough) submission must also have been made before that date.
- They must not have been given notice of redundancy before being placed on the Job Support Scheme.
What should your business do now?
As an employer, you should consider whether the scheme will benefit you and whether to apply it to employees who have returned to normal working. It is not limited to just employees who are still furloughed. You will need to write to employees and get their agreement to the new pay structure.
For more information on the job support scheme, see this government factsheet or give us a call to explore how it could work for you. As Peterborough accountants we’re local to your area and provide all the business accountant services you’d expect, including bookkeeping, accounting packages, corporate tax planning and payroll services.