The government’s Coronavirus Job Retention Scheme, commonly known as the Furlough Scheme, will be replaced from 1 November 2020 by the Job Support Scheme.
The new Scheme is designed to protect jobs that businesses feel are viable, but how does it operate?
Yes, all employers with a UK bank account and PAYE scheme can claim, regardless of previous Scheme activity. All small to medium enterprises can use the Scheme, but larger businesses need to meet a financial test based on any turnover deficits.
For an employee to be eligible, they must be on the employer’s payroll on or before 23 September 2020 and not be on notice of redundancy during the claim period. Any employee must work at least 33% of their usual hours for the first three months of the Scheme.
In principle, all employees, regardless of contractual entitlement to hours, are eligible, but the those whose working hours varies week to week, will require a more complex examination in order to calculate their ‘usual hours’.
Employees can be moved on and off the Scheme and do not have to be working the same pattern each month. However, each short-time working arrangement must cover a minimum period of seven days and contractual amendments must be agreed in advance and recorded accurately, because HMRC can request evidence as before.
For every hour not worked by an employee, the Government will pay 1/3 of this (not the employers national insurance or pension contributions), with the employer required to top up at least an additional 1/3 of their pay. This amount will be based on ‘usual wages’, similar calculations to be used as under previous Scheme. The maximum contributions from the Government is set at £697.92 per month.
What pay should the employee receive? Example:
John works 35 hours per week for a small business. His annual salary is £25,000.00. When working his full hours, John would receive £2,083.33 (gross) per month.
There is a reduced need for John to undertake work and therefore, he only works 33% of his hours. John should receive:
In total, John will receive £1,618.49 per month, but he has only worked 33% of his hours.
Get in touch
For further advice, please contact Matthew Warren, Wards Solicitors’ specialist employment lawyer.
Contact Matthew.Warren@wards.uk.com or telephone 0117 929 2811.
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