Job Retention Plan - The Facts & What Business Thinks

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We have a Job Retention Scheme Factsheet  and responses from business groups to the Chancellor's latest plans to keep the economy upright in the face of coronavirus.

Rishi Sunak has announced a new Job Support Scheme; and an extension of Self Employment Income Support Scheme and extensions to coronavirus-loans.

Dame Carolyn Fairbairn, CBI Director-General, said: "These steps from the Treasury will save hundreds of thousands of viable jobs this winter. It is right to target help on jobs with a future that currently can only be part-time while demand remains flat. This is how skills and jobs can be preserved to enable a fast recovery.

"Wage support, tax deferrals and help for the self-employed will reduce the scarring effect of unnecessary job losses as the UK tackles the virus. Employers will apply the same spirit of creativity, seizing every opportunity to retrain and upskill their workers.

"The Chancellor has listened to evidence from business and acted decisively. It is this spirit of agility and collaboration that will help make 2021 a year of growth and renewal."

 

TUC General Secretary Frances O’Grady said: 

"Unions have been pushing hard for continued jobs support for working people. We are pleased the Chancellor has listened and done the right thing. This scheme will provide a lifeline for many firms with a viable future beyond the pandemic.  

“But there’s still unfinished business. Unworked hours under the scheme must not be wasted. Ministers must work with business and unions to offer high-quality retraining, so workers are prepared for the future economy. 

“The government should target help at industries facing a tough winter and provide more support for families most at risk of hardship and debt.”

"A National Recovery Council should now be convened, bringing together government, business and unions. We can use the winter months to plan an economic spring, with fair rewards for key workers and good new jobs in green industry. Let's get moving on a national plan to build that together."

"We must use this period of protection to make the economy more resilient and to plan a strong recovery.  Ministers must quickly get Test and Trace working properly, so it’s fast and reliable through the UK. And enforcement bodies must get more resources to make sure all workplaces safe." 

 

Mike Cherry, Federation of Small Businesses National Chair, said:

"The UK’s small businesses are facing an incredibly difficult winter. These support package are the flipside of the coin to Covid-19 business restrictions. It is a swift and significant intervention, extending emergency SME loans, creating new wage support for small employers and the self-employed, and providing cashflow help on VAT deferrals and new Time To Pay for any tax bills to HMRC.

"We welcome that the Chancellor is ensuring that decisions to protect public health are informed by the need to protect the economy, people’s jobs and prospects for young people in our schools and workplaces."

 

British Chamber of Commerce Director General Adam Marshall said:

"The measures announced by the Chancellor will give business and the economy an important shot in the arm. Chambers of Commerce have consistently called for a new generation of support to help preserve livelihoods and ease the cash pressures faced by firms as they head into a challenging and uncertain winter.

"The Chancellor has responded to our concerns with substantial steps that will help companies preserve jobs and navigate through the coming months. The new wage support scheme will help many companies hold on to valued employees after furlough ends, and the extension of business lending schemes and tax forbearance will lessen the immediate pressure on cash flow for many affected firms."

 

Job Support Scheme Factsheet

What is it? - The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The company will continue to pay its employee for time worked but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction) and the employee will keep their job.

The government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the government contribution has not been capped.

Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

The scheme will open on 1 November 2020 and run for 6 months, until April 2021. Further guidance will be published.

 

2. Who is eligible?

 

Employers - All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.

Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties  from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).

The expectation is that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance

 

Employees - Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.

In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the government will consider whether to increase this minimum hours threshold.

Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month but each short-time working arrangement must cover a minimum period of seven days.

 

What does the grant cover?

For every hour not worked by the employee, both the government and employer will pay a third each of the usual hourly wage for that employee. The government contribution will be capped at £697.92 a month.

Grant payments will be made in arrears, reimbursing the employer for the government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.

'Usual wages' calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. Full details will be set out in guidance shortly. Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.

Employers must pay employees their contracted wages for hours worked and the government and employer contributions for hours not worked. Employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.

 

What does it mean to be on reduced hours?

The employee must be working at least 33% of their usual hours.

For the time worked, employees must be paid their normal contracted wage.

For time not worked, the employee will be paid up to two-thirds of their usual wage.

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.

 

How can I claim?

The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid on a monthly basis.

Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.

 

HMRC checks

HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred.

Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement and notify the employee in writing. This agreement must be made available to HMRC on request.

 

Example

Beth normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).

Her employer pays Beth £140 for the days she works. And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.

The government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.

Picture: The Chancellor has come up with new schemes to keep people working through the winter of 2020/21.

Article written by Cathryn Ellis
25th September 2020

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