How to use the new Job Support Scheme – Updated!
Rishi Sunak recently announced the Job Support Scheme to replace the furlough scheme which ends on October 31st. After being criticised for the new scheme not providing enough support, the government have now updated the Job Support Scheme. Here’s how it will now work.
How does the updated Job Support Scheme work?
The updated version of the Job Support Scheme will start on November 1st to replace the furlough scheme and will run for six months until the end of April 2021.
The updated Job Support Scheme means:
- The employee must now work at least 20% of their usual hours
- Companies must pay the employee for those hours worked
- The government will then cover 61.67% of the cost of hours not worked up to a cap of £1,541.75 a month
- The employer only now needs to cover 5% of the cost of hours not worked
Putting all of that together means employees should earn a minimum of 73% of their normal wages – so long as the government’s contribution cap hasn’t been exceeded.
And for those businesses in Tier 3 areas, the government will pay 67% of the employee's salary – with no obligation for those businesses to pay towards it. This will leave employees in Tier 3 areas taking home 67% of their pay.
When can businesses start claiming from the Job Support Scheme?
You’ll be able to start claiming from the UK government’s Job Support Scheme from December 8th 2020 through the gov.uk website, and then payments will be made on a monthly basis.
Although you need to wait until December to claim, the scheme opens on the 1st of November and will run to the end of April next year.
If you want to enrol employees into the Job Support Scheme, you’ll need to ask them to work a minimum of 33% of their usual hours. You should then submit your claim through the government website once payments have been made to the employee and it’s been reported to the HRMC.
This means payments from the Job Support Scheme will be paid in arrears.
Who is eligible to use the Job Support Scheme?
Which businesses can use the scheme?
It doesn’t matter if you used the previous furlough arrangements or not, so long as your business uses UK bank accounts and the UK PAYE scheme, you can claim from the new Job Support Scheme.
Small to medium businesses (SMBs) have no restrictions to enter the scheme, but that’s different for larger businesses. They will be asked to complete a financial assessment to show that their turnover is lower because of the impact of coronavirus.
Which employees can use the Job Support Scheme?
As the Job Support Scheme is designed to encourage companies to keep employees, staff can’t be on a redundancy notice while being enrolled. They also need to have been working at your company since 23rd September 2020.
The government maintains that this scheme is to support “viable jobs” and so insist that enrolled employees work at least 33% of their usual hours. They also say that after three months they’ll review that minimum amount of time with a view to increasing it.
Depending on your business’s needs, you’re able to rotate your staff on and off the scheme and you don’t have to make them work the same shift patterns each month. The only requirement is that each short-time working arrangement must cover a minimum period of seven days.
How much will employees get from the Job Support Scheme?
Employees on the updated Job Support Scheme will take home 73% of their salary – so long as the government’s contribution cap of £1,541.75 a month hasn’t been exceeded.
Putting my calculator to good use and doing a bit of rough rounding up, here’s how that breaks down:
- The employee’s full salary equates to 100% of hours worked
- The employee receives full pay for the 20% minimum required hours worked – 20% of the employee’s salary
- The government pays 61.67% of the 80% of hours not worked – 49% of the employee’s salary
- The employer pays 5% of the 80% of hours not worked – 4% of the employee’s salary
- Adding those percentages brings the employee’s take-home pay to 73%
To try and make that clearer, take a look at the graphic below:
How much will businesses save from using the Job Support Scheme?
Using my maths from above, if an employee works 20% of their hours, the government will pay 49% of their salary and your business will pay 24%.
This means your businesses will save 76% of the salary costs for each employee you have enrolled in the Job Support Scheme.
So what do you do next?
The current furlough scheme runs until the end of October 2020 so you should keep those arrangements in place.
What you need to do now is speak with managers to find out which employees they wish to enrol into the Job Support Scheme. The sooner you can work out which employees you’ll be enrolling into the scheme in November, the easier it will be to submit your Job Support Scheme claims when the government opens their portal on December 8th.
For the employees themselves, get your ducks in a row and communicate your plans to them as soon as possible. It’s highly likely that those who’ve been on furlough for long periods of time will welcome the chance to work for you again – even if it’s limited to 33% of their contracted hours.
How Perkbox can help
To help maintain the wellbeing of furloughed employees, especially when it comes to how these new changes might affect them, I recommend checking out our checklist with practical tips on how to support employee wellbeing through furlough. You can read it by clicking here or on the checklist below:
This information in this article was correct at time of publication on 5th October 2020. Please visit the UK government website here for the latest information.