The current Coronavirus Job Retention Scheme (CJRS) will come to an end on 31 October 2020. The new Job Support Scheme (JSS) will commence from 1 November 2020 and will run for 6 months until 30 April 2021. The scheme aims to help businesses keep employing people on shorter hours rather than making them redundant.
Whilst the detail of the scheme will no doubt evolve over time, in brief the scheme details we know of so far, are:
How can we help you?
At the time of writing we are aware of the following conditions:
We await further details of the scheme to understand what, if any, additional conditions will be applied.
To give employers an idea of how the scheme would work in practice, we have provided some examples below:
Jack normally works 40 hours a week for VHR Ltd for £2,000 per month. VHR Ltd currently only has 20 hours a week for Jack. Jack is therefore paid £1,000 per month for 20 hours worked per week.
He is then paid a total of £666.66 per month in respect of the 20 hours a week NOT worked (two thirds) £333.33 is paid by VHR Ltd plus £333.33 is claimed from the government. The missing £333.34 is what Jack must forego to make the scheme work. So, in this example, Jack gets 83.3% of his full normal pay for working 50% of his normal hours. 19.9% is paid by the government.
Elaine normally works 39 hours a week for VHR Ltd for £9,000 per month. VHR Ltd currently only has 26 hours a week for Elaine. Elaine is therefore paid £6,000 per month for her 26 hours worked per week.
She is then paid a total of £1,697.92 per month in respect of the 13 hours a week she doesn’t work. £1,000 is paid by VHR Ltd (one third) plus another £697.92 (i.e. the capped amount) is claimed from the government. The missing £1,302.08 is what Elaine must forego to make the scheme work. In this example Elaine gets 85.5% of her normal full pay for working 66% of the hours. 9% is paid by the government.
Ben normally works 30 hours a week for VHR Ltd for £1,500 per month. VHR Ltd currently only has 10 hours a week for Ben. Ben is therefore paid £500 per month for his 10 hours
worked per week. He is then paid a total of £666.66 per month in respect of the 20 hours a week he doesn’t work. £333.33 is paid by VHR Ltd (one third) and another £333.33 is claimed from the government.
The missing £333.33 is what Ben must forego to make the scheme work. In this example Ben gets 77.7% of his normal full pay for working a third of the hours. 28.5% is paid by the government.
Janine normally works 40 hours a week for VHR Ltd for £3,000 per month. VHR Ltd currently only has 10 hours a week for Janine. Janine is therefore paid £750 per month for her 10 hours worked per week. No grant can be claimed as Janine is working less than a third of her normal contracted hours.
The table below helps to understand the amounts to be paid depending on the percentage of reduced hours worked by the employee.
However, whilst it is yet to be clarified, we anticipate that the right an employee has to request statutory redundancy terms (after four weeks in a row or six weeks in a thirteen week period) under the grandfather scheme will NOT apply under the Job Support Scheme.
Employers will need to consider whether the scheme is of benefit and whether it should be applied to some employees who have returned to normal working; it is not limited to just employees who are still furloughed. If the scheme is not seen as a practical option, and employees cannot return to work from furlough, then employers will need to take immediate action now.
Given the scheme still amounts to a deduction in salary, employers should continue the practice of writing to employees to seek their agreement to the deduction in pay if they wish to utilise the scheme. HMRC have made it clear that the agreement must be made available to them on request.
Employers may wish to consider approaching employees currently furloughed to explain that the current scheme is coming to an end and to establish whether employees would like to be considered for the scheme if a return to normal working is not going to be viable.
Employers would also be well advised to start preparing alternative plans including consulting about redundancy if they have not already done so.
If you would like further advice on any of the issues discussed here, then email us at firstname.lastname@example.org