Furlough 3.0? The new Covid-19 Job Support Scheme
The government has announced that from 1 November, for 6 months, a new Job Support Scheme will step in to protect jobs in businesses which face lower demand over winter due to COVID-19.
The full guidance is not yet available, but there is a government factsheet, and here’s some of what we do know:
Job Support Scheme
Employees must work at least 33% of their usual hours to qualify. The employer must pay normal earnings for those hours.
For the rest of the time not worked (i.e. up to 2/3):
– the government will pay 1/3 of wages, subject to a cap of £697.92 per month
– the employer must pay 1/3 of wages
– the employee will forgo the remaining 1/3 (with the government factsheet stating it doesn’t expect employers to be able to afford to top this up)
In other words, an employee working 1/3 of their normal hours will receive in total:
- 1/3 of their wages paid by the employer as normal for the hours worked +
- 1/3 of 2/3 of their wages (subject to the cap) claimed by the employer as a government grant +
- 1/3 of 2/3 of their wages paid by the employer
The scheme will ensure employees earn a minimum of 77% of their wages (subject to the government cap).
Employers can claim the government contribution via a government portal online, at the end of each month, after the amounts have been paid to the employee.
What doesn’t it cover?
- Employees cannot be made redundant or put on notice of redundancy during a period in respect of which the grant is being claimed by the employer
- Employers cannot claim Class 1 employer NICs or pension contributions and will have to cover these costs themselves
- Employees do not need to have been previously furloughed, but they must be on the employer’s payroll on or before 23 September 2020
- Periods of less than 7 days are not covered, but employees can otherwise rotate on and off short-time working patterns of at least 7 days
Whilst all sized business can claim, large businesses must first meet a financial assessment test – demonstrating their turnover is lower due to COVID-19. The government factsheet also states that it does not expect large employers claiming under the scheme to make capital distributions such as dividend payments or share buybacks.
The expectations set out in the government fact sheet suggest that this will very much be a scheme to retain viable, long term jobs – rather than prolong an inevitable redundancy.
The scheme will be unlikely to prevent significant redundancy amongst lower skilled workers where there is a significant drop off in work or period of lockdown- e.g. hospitality, travel, facilities management because of the significant increase in employer contribution. It will however offer significant assistance with higher skilled employees able to work more limited hours.
The fact sheet indicates that HMRC will check claims and inform employees directly of full details of the claim – presumably as a way of combating the fraud which arose under the furlough scheme.