Do you currently have employees on furlough? Are you unsure if you can afford for these employees to come back to work next month? Are you considering making redundancies?
As the furlough scheme is coming to an end on 31st October it can be a worrying time for businesses as difficult decisions may need to be made.
To support businesses the Government has however introduced a new scheme called the Job Support Scheme, and it runs for 6 months, commencing on 1st November 2020.
Under the Scheme, any employee (including those that have not been on furlough in the past) will be eligible provided they meet the following criteria;
- They must work at least 33% of their contracted hours
- Employees must have been on the payroll before 23 September 2020
The grant will effectively cover 1/3 of every hour not worked by an employee, up to a maximum of £697.92 a month.
The best way to illustrate how it works is with an example;
You have an employee who usually works 5 days per week and earns £500 per week. You decide to put this employee on the Job Support Scheme, working 2 days a week (40% of her usual hours).
The employer (you) will pay the employee for the days they work which would be £200 (£500 per week*40%).
For the time this employee is not working (3 days or 60% of usual hours, or £300), they will also earn 2/3 of this unworked pay which is £200 (the £300 of lost pay*2/3), bringing the employees total earnings to £400 (80% of their normal wage).
The employer (you) will pay the £400 plus any NI and Pension Contributions, and then claim the government grant that will be worth 1/3 of the hours not worked. In this example the Grant would be worth £100 (£300 of lost pay*1/3).
Grants will be payable in arrears, and only after the payroll and RTI (Real Time Information) submission has been made to HMRC.
The table below gives a good illustration of the level of the government grant and employer costs, based on the percentage of normal hours worked.
|Hours Employee Worked||33%||40%||50%||60%||70%|
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||78%||80%||83%||87%||90%|
|Gov’t Grant (% of normal wages)||22%||20%||17%||13%||10%|
|Employer Cost (% normal wages)||55%||60%||67%||73%||80%|
This scheme is far less generous than the furlough scheme, as you can see from table above. If an employee worked the minimum 33% of their normal hours, the employer would still need to pay 55% of the employees wages (plus any Employer NI and Pension contributions), and the government grant would be just 22% of the employees normal wages.
Job Retention Bonus
The government has confirmed that employers using the Job Support Scheme, will still be able to access the Job Retention Bonus, provided employees meet the criteria of being employed throughout the period from you last furlough claim to 31 January 2021, and during the period from 6 November 2020 to 5 February 2021 have received at least £1,560 gross pay (or an average of £520 per month)
The Job Retention Bonus is then a £1,000 grant per employee that has been on furlough at any time.
As always, if you would like to talk this through with us then please get in touch, we are happy to help.