Over the last few months, the government have introduced a number of grants, loans and support measures to help businesses affected adversely as a result of COVID-19. These schemes have been created to support as many businesses as possible and have sometimes been tailored specifically to those sectors and businesses hit the hardest.
Coronavirus Job Retention Scheme (CJRS)
The CJRS enables employers to furlough their employees and claim back a proportion of their wages to ensure that employees receive 80% of their wages for the time they are furloughed. Applications to furlough employees closed in June, and the percentage of government assistance has been reducing each month. For October the percentage available to claim back reduces to 60% up to a cap of £1,875. Employers must also pay National Insurance and pension contributions.
This scheme ends on 31 October 2020 and will be replaced by The Job Support Scheme (see below)
Job Support Scheme
This is a new scheme which will offer government grants of up to 22% of the salaries of employees working part time, where the government contribution has not been capped, because of the impact of COVID-19. An employer needs to pay their employee for the hours they work at their normal rate of pay, and for the hours that they don’t work the government and the employer will each pay one third of the remaining salary. The result should be that employees will be paid 77% of their wages (subject to the cap below) if they work a third of their usual hours, as their employer will pay 55% of their salary and 22% paid by the government.
The government will cap their contribution at £697.52 a month per employee (compared to the furlough scheme of £2,500 per month) and employers will need to pay National Insurance and pension contributions as normal. Employees must work for at least a third of their usual hours for the first three months of the scheme.
|Hours employee worked||33%||40%||50%||60%||70%|
|Hours employee not working||67%||60%||50%||40%||30%|
|Employee earnings (% of normal)||78%||80%||83%||87%||90%|
|Government grant (% of normal wages)||22%||20%||17%||13%||10%|
|Employer cost (% normal wages)||55%||60%||67%||73%||80%|
The Job Support Scheme starts on 1 November and will run for six months. Payments will be made one month in arrears. All UK employers with a UK bank account and UK PAYE schemes can claim support from the scheme, and the gov.uk portal will open on 1 December. Businesses do not have to have participated in the previous CRJS (furlough) scheme in order to sign up to this new initiative. Large employers will need to undertake a financial assessment test to show that their turnover has been impacted adversely by COVID-19, although it is presently unclear what the test will be. In addition, the Job Support Scheme factsheet states that the government expects that large employers will not be making capital distributions, such as dividends or share buybacks if using the Job Support Scheme.
As with the furlough scheme, the employee must agree in writing to the new working arrangement, and HMRC have made clear that they will be checking claims for fraudulent or incorrect information.