The new Job Support Scheme – welcome news for SMEs
The government have announced the Winter Economy Plan which includes the introduction of a new Coronavirus Job Support Scheme (CJSS) from 1 November 2020.
The Chancellor’s announcement will be welcome news to SMEs across the UK when it launches on 1 November 2020.
The Coronavirus Job Support Scheme (CJSS) has been designed to support viable UK employers who face lower demand due to COVID-19, and to help keep their workforce employed and will be available until 30 April 2021.
How does it work?
Employees will need to work a minimum of 33% of their usual hours. For the worked hours, employees will be paid as normal. For every hour not worked the employer and the government will each pay one third of the employee’s usual pay, with the government contribution being capped at £697.92 per month.
Based on the headline announcement, an employee who normally earns £3,140.64 per month, working 33% of their usual hours in a given month would receive £2,442.72 as follows:
- Worked hours £1,046.88
- Non-worked hours £1,395.84 – £697.92 from the government and £697.62 from the employer.
Employee gross pay is guaranteed at 77% of their pay, where the government contribution has not been capped. The employer will pay 55% where an employee is working 33% of their usual hours. The employer will be reimbursed in arrears for the government contribution.
The level of grant will be calculated based on an employee’s regular wage, capped at £697.92 per month.
|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 (% of normal wages)||55%||60%||67%||73%||80%|
Employees who go back to work on reduced hours will be paid two thirds of their regular wage for those hours they can’t work.
To qualify, an employee cannot be on notice of redundancy.
How long will the scheme run for?
The scheme will run for six months from 1 November 2020 and is open to employers with a UK bank account and a UK PAYE scheme.
Who is eligible?
All Small and Medium-Sized Enterprises (SMEs) will be eligible. Large businesses will be required to demonstrate that their business has been adversely affected by COVID-19. The government expects that large employers will not be making capital distributions (such as dividends) while using the scheme.