The government has begun to wind down the furlough scheme which covered up to 80% of an employee’s wages up till August, 70% in September and 60% in October. The scheme, which supported the livelihoods of over 9.6 million British workers between March to June, has set the government back over £35 billion. As it approaches its end on 31st October, despite coronavirus infection rates rising and lockdowns being re-instated across the country, leading to many calling for an extension, the Chancellor hasn’t changed his stance on the closure of the scheme. Instead he has introduced the Jobs Support Scheme as part of the government’s Winter Economy Plan which sets out a range of measures attempted to carry the British economy through what is likely to be an economically scarring winter.

So how is the Jobs Support Scheme different from the furlough scheme and what does it mean for employers and the economy?

Commencing from 1st November, it’s applicable to workers who were working as well as being paid for at least a fifth(20%) of their normal hours and for whom an RTI submission must have been filed on or before the 23 September 2020. This is effectively a notification to HMRC regarding the payment to an employee for their hours worked. The earlier benchmark of 1/3 of the normal hours was revised after many businesses called for additional state support given their inability to operate if situated in Tier-3 restriction areas. Those in Tier-2 areas also made a case for further intervention from the Treasury to avoid large scale redundancies stemming from the hit to their revenue as a result of households being unable to mix.

Under the updated measures, the scheme will remunerate employees for their unworked hours such that their total earnings equals 2/3 of their normal pay. The Government and the employer will each pay 62% and 5% respectively of the employees’ unworked hours. This is revised contribution for the employer is far less than under the original JSS-which required employers to cough up a third(33%) of the unworked hours. It reflects the sheer pressure placed on the Chancellor to uphold employment levels and prevent mass unemployment from gripping the UK economy over the winter. The Government’s contribution was previously capped at £697.92 but it is yet unknown whether this will still be the case.

Employees needn’t work for fixed time slots and can be rotated by employers each month. The scheme will, however, require employers to pay for Class 1 Employers’ NI and/or pension contributions since this isn’t covered by the scheme.

In terms of eligibility, all small and medium sized enterprises can claim on the scheme. Large businesses may also utilise this scheme but only where they can prove that Covid-19 has had a material adverse impact on their revenues. The government has also been unequivocal on its expectations of large employers who avail the scheme to abstain from making payments in the form of dividends or share buybacks.

Wish to have a more in-depth understanding of how the scheme and other government measures affect you? Are you uncertain over whether your business can make a claim under existing support schemes? Then why not book a free consultation with Cheylesmore Accountants or fill out a simple form using the ‘Contact Us’ tab to inform us how we can help fuel your business. Whether its taxation, budgeting or cash flow management, our chartered accountants in Coventry offer an unparalleled level of service across all aspects of your business.