How To Action The New Job Support Scheme In Payroll
The new Job Support Scheme was announced by the government in September, and it is designed to top up the wages of employees unable to work full-time because of coronavirus restrictions over the winter. Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Businesses will continue to pay their employees for time worked, but the burden of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The scheme will open on 1 November 2020 and run for 6 months, until April 2021.
All employers with a UK bank account and UK PAYE scheme can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
The scheme is open to all small and medium enterprises, which is those with 250 employees or fewer. Larger businesses are also eligible but only if they can prove their turnover has fallen because of coronavirus.
Employees must have been on an employer’s PAYE payroll on or before 23 September 2020. This means that an RTI submission must have been made on or before 23 September notifying HMRC of a payment to that employee.
For the first three months of the scheme the employee must work at least 33% of their usual hours. The Government have said that they will review this after 3 months to decide whether to increase this minimum hours threshold.
Employees will be able to rotate on and off the scheme and they 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.
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.
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.
Level of Government Funding
To be eligible for the scheme, the employee must be working at least 33% of their usual hours, and employees must be paid their normal contracted wage for the time worked.
For time not worked, the employee will be paid up to two-thirds of their usual wage. 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. Unlike the Coronavirus Job Retention Scheme, the grant will not cover employer NIC or pension contributions, but these are still payable by the employer.
The Government contribution will be capped at £697.92 per month. Where the Government contribution has not been capped, this will mean that the employee will earn a minimum of 77% of their normal wages.
Just to give you an example, and I’m going to keep it very simple with an employee that normally works 5 days a week and earns £500 a week. The company is suffering reduced sales due to coronavirus, and rather than making the employee redundant, the company has decided to reduce the employee's hours to two days a week.
The employee is paid £200 by their employer for the days that are worked (40% of usual hours).
And for the time not worked (60% of usual hours), they will also earn two thirds of their normal pay, bringing the employee’s total earnings to 80% of their normal wage.
The Government will give the employer a grant worth £100, which is one-third of the hours not worked, equivalent to 20% of their normal wages to support the employer in keeping the employee employed.
And just to note, employers cannot top up their employees’ wages above the two-thirds contribution to the hours not worked at their own expense.
Don’t worry though - there’s no need to get too hung up on the calculations, as BrightPay will be able to do this for you. Similar to the Coronavirus Job Retention Scheme, BrightPay will be able to help you with calculating the payment and helping you with the claim figures needed. The only aspect that BrightPay won’t be able to do is determine the employee’s usual hours.
‘Usual wages’ calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. For employees who have previously been furloughed, their usual pay prior to COVID will be used to calculate usual wages, not the amount they were paid whilst on furlough.
Making a claim
The scheme will run 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 and grants can only be used as reimbursement for wage costs actually incurred.
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.
That’s everything we know in relation to the Job Support Scheme. At the moment we are still awaiting detailed guidance from HMRC, so as well as having a few aspects of the scheme that we are still not sure about, it also means that we cannot complete the programming of the Job Support Scheme functionality in BrightPay.
As soon as we know more, we will be updating our online help guides, and join our webinar on 18th November where we will be able to show you the Job Support Scheme in more detail, along with how it is actioned in the payroll software.
Webinar: New Job Support Scheme Explained
18th November – 10.30am
In this webinar, we look at what you need to know about the new Job Support Scheme, including which employees are eligible, the level of government funding, and how the scheme is actioned through payroll. We will also explore the rise in redundancies and the new changes regarding statutory redundancy and notice pay for furloughed employees. Register now.
What you'll learn:
- Everything you need to know about the Job Support Scheme
- Which employers and employees are eligible
- How to operate the Job Support Scheme
- How BrightPay’s Job Support Scheme Calculator & Claim Report works
- How to calculate notice pay and redundancy pay for furloughed employees
- How to keep in touch with employees on reduced hours