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Job Support Scheme: quick FAQs

So, no more furloughs and the replacement sounds a bit complicated. Something about thirds and two-thirds, I think. Honestly, thinking through the details made juggling spaghetti sound easy.

But with a little more time and a lot more focus on the details, it’s becoming clear. So here’s a quick guide and hopefully it will help you too.

 

What’s the deal?

 It’s a way of keeping people employed, partly paid by the Government for up to 6 months. Employers pay at least 55% of someone’s wages and the employee has to work at least a third of the week. The employee will get 78% of her or his normal pay.

The employer pays for time worked. For the rest of the week, when the employee isn’t working, the shares are:

  • A third paid by employer
  • A third paid by Government
  • A final third is unpaid.

The employee will get at least 77% of their normal pay – although higher earners might lose out because the Government’s contribution is capped at £697 per month (so anyone earning above £36,000 pa will lose out in that way).

So the minimum cost for employers is 55% of pay, resulting in 78% of normal pay for employees. It goes up as their working hours increase:

  • 2 days = 60% for employers and 80% for employees
  • 2.5 days = 67% for employers and 83% for employees
  • 3 days = 73% for employers and 87% for employees.

The claims do not cover pension contributions and Class 1 employer NICs. If you keep someone employed, you can get a £1,000 bonus (same as with furloughing people) if they are still employed at 31st January 2021. This article has more information about the bonus.

 

So I pay more than if I hired a part-time person?

Well, yes. You could hire someone to work half a week and the costs would be about the same. But that would be a new recruit, as opposed to keeping someone who already works with you and (hopefully) knows what they’re doing.

Alternatively you could get to the same place by asking the employee to go part-time, either for a temporary period or permanently, and not use this scheme. But there are pros and cons: this scheme’s quite flexible (the minimum period’s only 7 days), and that could be useful if your business picks up.

 

What’s the minimum number of working hours to use this scheme?

It depends on how long your normal working week is. If it’s 37.5 hours, then a full-time employee has to work at least 12.5 hours. If it’s a 40-hour week, then the minimum to be worked is 13 hours and 20 minutes.

That’s the rule for at least the first 3 months of the scheme. The Government might increase the minimum number of working hours from a third after that, so from 1st February 2021.

 

Is this only for people who have already been off work on furloughs?

No. You can use it for people who you’ve applied for furlough money – but also add new people. If they joined your company during 2020, you can use this scheme as long as they were added to your payroll by 23rd September.

 

Put it in writing

As with using the furlough scheme, employers must agree these new arrangements with employees (because they are contractual changes) and put them in writing.

 

Can we make changes as we go?

Each claim must be for a minimum of 7 days, so it’s fairly flexible. Employers can increase or decrease someone’s working hours, and put people on and then off the scheme.

But if an employee is on this scheme, their job is protected and they cannot be made redundant or put on notice that their job is at risk of redundancy – this will be a more significant issue for any large-scale redundancies by big employers. An employer would have to take someone off the scheme and stop claiming in order to start a process to terminate employment, including redundancy consultations.

 

What about people on zero-hour contracts?

No support so far and the details only cover people with fixed contractual patterns of working hours. Watch this space.

 

It sounds complicated – is it a good idea to consider?

Everything is worth considering. Losing people from your organisation means a loss of skills and experience, plus having to spend time and money training up new people if you have to replace them in the future.

Some key things to think through are:

  • Can you afford to pay 55% of someone’s pay? If you can’t, then it’s a non-starter. The grants will be paid in arrears, so you have to pay the employee before you receive the Government’s contribution.
  • Are you likely to have more work and money in the next couple of months? If yes, you could use this scheme to keep people and gradually increase how much they can work – as you can afford to pay more.
  • It’s higher cost than furloughs but gives you more flexibility: you can increase and reduce people’s working hours, including by returning them to full-time work and then reducing their hours to part-time with these subsidies.
  • If you’re not sure, it’s worth trying: any claim can be for only 7 days and then you can change the arrangements.

 

More information

HMRC has a factsheet available at https://www.gov.uk/government/publications/job-support-scheme

 

We’ll update this as things change.

 

By Brian

 

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