Update 2 November 2020: On 31 October the Prime Minister announced the second lockdown in England. This lockdown will start from 00:01 Thursday 5 November and last 4 weeks until Wednesday 2 December. This has meant that the end of the Coronavirus Job Retention Scheme (CJRS) has now been delayed until December. To find how the CJRS will be working in this second lockdown, please see our previous article here.
Original article continues:
As you may be aware, the government has now introduced the Job Support Scheme to replace the Furlough Scheme and this is starting from 1 November 2020 and will run until 30 April 2021. We wanted to inform you of a key implication that may prevent you from being able to claim under the new scheme.
How the scheme works
The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked. Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government. The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish. The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.
Employers will be able to claim from 8 December, covering salary for pay periods ending and paid in November. Claims must be completed on a monthly basis. Grant monies must only reimburse sums already paid to the employee. The Job Support Scheme grant will not cover National Insurance contributions (NICs) or pension contributions. Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
JSS Open temporary working agreements
To be eligible for the grant, employers must have reached written agreement with their employee that they have been offered a temporary working agreement.
This temporary working agreement must cover at least seven consecutive days.
Employers should discuss with their staff and make any changes to their employment contract by written agreement.
Employers must maintain records relating to the terms of the temporary working agreements for each employee, and:
- make sure that the agreement is consistent with employment, equality and discrimination laws
- keep a written record of the agreement for 5 years
- keep records of how many hours employees work and the number of usual hours they are not working
- this agreement must be made available to HMRC on request
Working out the percentage of hours worked – 20%
When calculating the worked hours most will assume out of a 5 day week that working 1 day would equate to working 20%. However, the Job Support Scheme requires that the week is divided by the calendar days rather than the standard working week. Below is an example of how you may miss out on utilising the Job Support Scheme by only working the one day.
An employee has a fixed salary and works 37.5 hours per week. Under the new scheme the employer has requested the employee works every Wednesday in November, however as you will see below this does not qualify the employee for the Job Support Scheme.
The steps to calculate the fixed employee’s usual hours are:
- The greater of the number of hours contracted for at the end of the last pay period before 23 September 2020 (37.5) and the number of hours contracted for at the end of the last pay period before 19 March 2020 (37.5): 37.5
- Divide by the number of calendar days in the repeating working pattern, including non-working days: 37.5÷7=5.36
- Multiply by the number of days which the employee is eligible to be claimed for under JSS Open: 29 days (in November) x 5.36 = 155.44 rounded to 155 usual hours.
The steps to calculate the worked percentage:
- Calculate the hours worked under the new temporary contract: 7.5 hours x 4 Wednesdays = 30 hours
- 30 hours ÷ 155 usual hours x 100 = 19.35%
- Therefore the employee would not qualify for the Job Support Scheme.
We would therefore recommend that if you are expecting to utilise the scheme, you should have your employees working one and a half – two days to ensure the 20% criteria is met.
October 30th, 2020