What is the job support scheme?

Published: 01/02/2021

We don’t need to tell you the impact of COVID-19 on businesses and workers up and down the country, in fact, around the world has been profound.

Consumers are spooked, to put it lightly, and on top of that various levels (or tiers) of lockdown restrictions have left some businesses unable to trade full stop for periods of time.

It’s an unprecedented and uncertain time for the UK’s workforce, but the government has put various measures in place in an attempt to tide businesses over and lessen the impact on employment, one of which is the Job Support Scheme.

At takepayments we’ve done and will continue to do everything we can to support businesses through COVID-19, so with that in mind we’ve put together this comprehensive guide to the Job Support Scheme - what it is, how it works, and how you can apply. 

What is it?

The Job Support Scheme was created in an effort to protect viable jobs in businesses faced with a decrease in demand as a result of COVID-19 over the winter months.

The idea is to keep employees ‘attached’ to the workforce even though there mightn’t be adequate work for them as a result of COVID-19. Think of the Job Support Scheme as a tool for weathering the storm of the pandemic, if you will. 

The government’s aim with the Job Support Scheme is to target financial support at those businesses who need it most, i.e. are being impacted most significantly by COVID-19 but can continue to offer their employees some work.

Confused? Here’s how GOV.uk describes the scheme:

“Now the economy is opening up, we should target support on those businesses that need it most: focusing on those that are being impacted by Coronavirus and who can support their employees doing some work, but that need more time for demand to recover.”

Essentially, the Job Support Scheme is aimed at businesses struggling as a result of COVID but not forced to close up shop altogether - financial aid to tide them over until things pick back up again on the other side.

How will it work?

Under the scheme, businesses will continue to pay their employees for any hours they have worked, but if this is fewer hours than normal the additional wages will be split between three parties:

  1. The employer - through wage support
  2. The government - also through wage support
  3. The employee - via a wage reduction.

Through the Job Retention Scheme, the government will cover up to a third of hours not worked (up to a cap), with the employer also contributing a third of hours not worked. 

So long as the upper limit isn’t imposed, this will mean employees should receive at the very least 77% of their regular wages.

What’s the cap?

The government’s contribution to wage payments made under the Job Support Scheme is capped at £697.92 per month. 

Businesses making use of the Job Support Scheme will also be eligible to receive the Job Retention Bonus providing they meet the criteria to claim.

The Job Retention Bonus

The Job Retention Bonus is a one-off taxable payment of £1,000 made to businesses for each eligible staff member they’ve furloughed and kept employed continuously until January 31st, 2021.

Claims for the bonus can be made between February 15th and March 31st, 2021 - you can find out everything you need to know about the bonus here.

Who is eligible?

Employers

Any business with a UK bank account and UK PAYE scheme can claim funding under the scheme. 

Good to know: Previously making a claim under the Coronavirus Job Retention Scheme is not a prerequisite for applying for the Job Support Scheme.

A financial assessment test will be a necessary requirement for large businesses to ensure funding is only given to those whose turnover is lower than before experiencing difficulties from COVID-19.

But, there will be no financial assessment test for small and medium businesses. 

Employees

In order to be eligible, an employee must be on a business’s PAYE payroll on or before September 23rd, 2020.

In real terms this means an RTI (Real Time Information) submission must have been made to HMRC, notifying payment to that employee, on or before September 23rd, 2020.

During the initial three months of the Job Support Scheme, eligible employees must work a minimum of 33% of their usual hours. Following this period the government intends to evaluate and potentially revise (increase) the minimum hours threshold.

Good to know: Eligible employees do not need to work the same shift patterns each month and are allowed to cycle on and off the scheme. 

How do payments work?

Payments made to businesses under the scheme will be made in arrears - meaning the government will essentially be reimbursing employers for payments they’ve made to employees covering the government’s contribution to wages.

The government is yet to announce how ‘usual wages’ will be calculated and has promised further guidance soon, although it’s believed the calculation will be similar to that done for the Coronavirus Job Retention Scheme.

What do the payments cover?

The money paid to businesses by the government will not cover:

  • Class 1 employer National Insurance Contributions, or
  • Pension contributions

However, these will both still remain payable by the employer. 

What do businesses need to do?

Before applying for the scheme, businesses need to agree on new short-time working arrangements with their employees and amend their contracts of employment to reflect this.

This new agreement must be ready and made available to HMRC if they request it.

In order to be eligible for the scheme, this new contract must cover at least 33% of the employees’ normal hours.

How to apply

The Job Support Scheme opens on November 1st, 2020, and is expected to run until the end of April 2021. 

Claims can be made from December 2020 and will be made online via the GOV.uk website.

Given that the grant payments are made in arrears, businesses will be expected to pay their employees wage contributions before making a claim for the Job Support Scheme. 

Once these payments have been reported to HMRC via an RTI return, the employer will be eligible to claim and the grant will be payable retrospectively. 

Good to know: It goes without saying that HMRC will be checking all claims and businesses can only claim for the reimbursement of wages actually paid. Fraudulent or incorrect claims will be withheld or need to be paid back. 

An example of the Job Support Scheme in action

We totally understand it’s all a bit mind-bending and can be tricky to get your head around, so here’s an example of how the scheme will look in action.

  • Thomas, a salesclerk, ordinarily works a five day week and earns £700 per week.
  • His company is struggling with sales due to COVID-19 and the business decides to put Thomas on the Job Support Scheme, working two days a week (40% of his usual hours), as opposed to making him redundant. 
  • His employee pays him £280 for the days he now works.
  • For the three days - or 60% of time - he no longer works, worth £420, he’ll earn two-thirds of his wages, equivalent to £280. 
  • This brings Thomas’ total earnings to £560, or 80% of his usual wage.
  • Thomas’ employer will receive a grant worth £140, (one-third of his hours not-worked and 20% of his normal wage), from the government to support them in keeping his job. 

For as long as this pandemic exists we’ll continue to do whatever we can to support small businesses through the challenges it poses, and you’ll find all the latest advice, news, and guidance over on our dedicated COVID-19 information hub. 

Bryony Pearce

Bryony Pearce

Copywriter

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