As we reported to you the furlough scheme is due to end on 31 October 2020.
The Job Support Scheme will replace the furlough scheme allowing workers to receive three quarters of their normal salaries for six months from 1 November 2020.
In an attempt to stop mass unemployment and to support ‘viable jobs’ the
government and firms will top up wages for employees unable to return to full time working due to Covid-19.
The furlough scheme initially paid 80% of wages and under the new Job
Support Scheme this will fall to 22%.
Companies who use the Job Support Scheme can also still claim the Job
Retention Bonus, where the government pays £1,000 for every furloughed
employee who comes back to work until at least the end of January.
A similar scheme for the self-employed will be available.
Summary of the Job Support Scheme:
- The scheme will run for six months starting in November.
- The government will subsidise the wages of employees working fewer than normal hours due to lower demand.
- The employee must work a minimum of 33% of their usual hours.
- For the time worked, employees must be paid their normal contracted wage.
- The government and the employer will each cover one third of the lost pay for the hours employees cannot work.
- For each hour not worked by the employee, the government and employee will each pay one third of the usual hourly employee rate.
- The government contribution capped at £697.92 per month.
- All small and medium sized businesses are eligible for the scheme.
- Larger business are eligible if turnover has fallen during the crisis.
- It will be open to employers across the UK even if they have not previously
used the furlough scheme.
- Employees must be on the PAYE scheme on or before to 23 September 2020.
- For the first three months of the scheme the employees must work at least 33% of their normal hours.
- After the three months, the government will consider whether to increase this minimum threshold.
- Employees can be on and off the scheme but each work period must be for a minimum of seven days.
- The government’s contribution will be paid in arrears to the employer.
- Class 1 NI and pension contributions to be paid by the employer.
- Employees cannot be made redundant or be given notice of redundancy during the period which the employer is claiming the grant for that employee.
- Employer to claim on line from December 2020 via gov.uk.
- Employers must confirm new the new short-term working arrangements in writing, making changes to the employment contract by agreement.
The VAT reduction for hospitality and tourism sectors from 20% to 5%, which commenced 15 July and was due to expire 12 January 2021, will now be extended until March.
Loan Schemes Update
Businesses that borrowed money through the government’s ‘Bounce Back’ and ‘Coronavirus Business Interruption Loan’ schemes can repay over 10 years instead of the original six year term under a new Pay as You Grow flexible repayment system.
Application for the various schemes was due to end in October and November but businesses will now have more time to apply for these loans as well as the Coronavirus Large Business Interruption Loan Scheme and the Future Fund.