In an attempt to prevent a winter of discontent, on Thursday the Government announced further measures designed to support jobs and prevent mass redundancies.
The Job Support Scheme will start in November 2020 and is scheduled to be available for 6 months. The key points we know about so far are:
- All employers operating PAYE and with a UK bank account qualify, although large businesses need to satisfy a financial eligibility test.
- You do not need to have furloughed employees to participate in this scheme.
- Employees may agree to work shorter hours. The cost of the hours not worked will be split between the employer, the Government and the employee (by forgoing pay). For an employee working 33% of their normal hours, the employer will pay 55% of normal pay, the Government 22% and the remaining 23% is unpaid.
- The Government grant is capped at £697.92 a month
- Class 1 employer NICs and pension contribution are excluded from the grant.
- Employees need to work at least 33% of their normal hours during the first 3 months. After 3 months the Government will be reviewing this with a view to increasing the minimum number of hours required.
- As with the Coronavirus Job Protection Scheme, the short time working arrangements must be agreed with employees and that agreement must be captured in writing as HMRC may ask to see it.
- Employers participating in the scheme will be eligible to claim the Job retention Bonus in 2021 (£1,000 per employee who participated in it).
- Employees cannot be made redundant or put on notice of redundancy whilst in the scheme.
What do we need to do now?
We know that many of you are facing difficult staffing decisions at the moment, and this scheme may well provide a means of bridging a gap between income and salary costs. Steps to take now include:
- Financially model the cost of the scheme versus redundancies. Although it may be cheaper in the short term to make redundancies, there are hidden costs associated with recruiting good employees when work picks up again.
- Check whether your contracts already give you the ability to impose short time working.
- Engage with your employees on your plans and seek feedback.
- Capture what you agree in contractual variation letters and make sure the employee receives and accepts the terms. A signature is the best way of showing agreement.
Please join us for our free webinar to discuss the detail of the rules and to answer any questions you may have about this new scheme, furlough, and how to manage employees returning to work.
Register your place here:
In the meantime do contact us if you have any questions.