Claiming Furloughed Wages
At the last moment, the Government have announced that the Coronavirus Job Retention Scheme (furlough scheme) will now continue until the beginning of December. Up until 31st October, businesses claiming would have been claiming 60% of affected staff wages but this has now been increased to the full 80% for this month only.
It is anticipated that the new Job Support Schemes will begin in December, but as we all now know, these matters can change in very quick time.
We will continue to monitor this situation over the coming weeks and will update you as and when information becomes available. We recommend you consult with your accountant in relation to this development but you can also call the Federation Helplines or visit https://www.gov.uk/government/news/furlough-scheme-extended-and-further-economic-support-announced for more information.
Job Support Scheme
Following on from the Coronavirus Job Retention Scheme, November 1st will see the introduction of the Job Support Scheme. The Job support Scheme is designed to protect viable jobs and businesses who are facing lower demand over the winter months due to Coronavirus. There originally only one type of Job Support Scheme, but after much consideration and ‘chatter’ amongst businesses, the Government have now split the scheme into two. The schemes will now be known as JSS Open (for businesses facing decreased demand) and JSS Closed (for businesses required to close under lockdown regulations).
Your employee will need to work at least 20% (no longer 33%) of their normal hours.
Your employee will receive their normal pay for the hours they work, and two-thirds of their pay for the hours they do not work. This ensures that the employee receives at least 73% of their normal wage, where they earn £3,125 a month or less.
For the two-thirds top-up, the government will pay 61.67% and the employer will pay 5%, plus NI and pension contributions on the full amount.
An express written agreement between employer and employee is required.
The position remains that the employee will receive two-thirds of their normal wages, funded by the government (to a maximum of £2,083.33 per month).
The employer will have to pay NI and pension contributions on that amount.
An express written agreement between employer and employee is required.
There are also some general points that apply to both schemes, these are:
Employers can top up wages (the previous publication of the schemes prevented this).
All SMEs are eligible, but large businesses (250 or more employees) are only eligible if their turnover has fallen due to coronavirus (according to their VAT returns).
Fully funded public sector employers cannot claim, but partly privately funded public sector employers can claim if that funding has been disrupted.
Employers will claim in arrears for salary monies already paid. The first claim can be made from 8 December 2020 (ie 5 weeks after the scheme opens on 1 November) via an online portal, like the CJRS.
Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
Section 5 of the Government guidance includes indicative calculations, but further details are to be published at the end of October.
The two Job Support Schemes will be running from November 1st 2020 until April 2021. The scheme is open for all employers with a UK bank account and UK PAYE scheme; there is also no requirement for either the employer or employee to have previously used the Coronavirus Job Retention Scheme. Additionally, only employees who were on the employer’s PAYE payroll on or before 23rd September can take advantage of the scheme.
The Job Support Scheme is designed to sit alongside the Job Retention Bonus, meaning businesses can benefit from both schemes to help protect jobs.
Of course, the Government’s Job Support Scheme is designed to help ‘viable’ businesses. There will be some instances where the neither the open or closed Job Support Scheme is effective enough to keep all team members employed. Therefore, redundancies may inevitably still be a serious option. If this is the case, it is worth noting that whilst an employee is registered on the Job Support Scheme then they cannot be made redundant.
If the Job Support Scheme is not a viable route for a business, redundancies are an option that unfortunately may have to be explored. Redundancies are a contentious piece of employment law and if the correct procedure is not followed to the T, businesses are left open to claims of unfair dismissal.
We mentioned this in last month’s article, but to re-cap, here is the correct redundancy procedure that needs to be followed:
Define the business rationale for wanting to make redundancies; there are three to choose from:
- Closure of entire business
- Closure of entire workplace
- A diminishing need for employees to carry out work of a particular kind
Identify the employees who are at risk of redundancy as well as the number of employees who are likely to be made redundant. The employee selection will need to be justified with legitimate reasons. Consideration also needs to be made as to the employee’s job description, the extent to which employee job roles are interchangeable as well as the extent to which other employees are doing the same or similar work.
Businesses need to then score their selection of employees using a scoring matrix. The matrix can cover quantity of work, quality of work, timekeeping and even absence records. Remember that the scoring needs to be fair and objective.
Businesses need to consider the cost of redundancy. In addition to statutory redundancy pay, there is notice pay, accrued holiday pay as well as the cost of salary whilst the consultation process takes place.
Of course, as with all employment law legislation and procedures, the above is just a guide. Dependent on the business scenario, the process may differ slightly due to circumstances. We cannot stress how important it is to take professional, legal advice before embarking on the redundancy process.
New Financial Support for Northern Ireland
Businesses that may be forced to close due to restrictions and local lockdowns will be able to access financial support for every 2 weeks they have to close. The amount available is dependent on the size of the business, for example, the thresholds are:
Small businesses with a Net Annual Value (NAV) of up to £15,000
Medium businesses with a NAV of £15,001 to £51,000
Large businesses with NAV of £51,001 or more
Tax Cuts and Deferrals
The Government has also announced that it is extending the temporary 15% VAT cut for the tourism and hospitality sectors until the end of March 2021. The 5% tax rate has been a fixture in the hospitality and tourism industry since July, so businesses are probably well aware of what it means. However, to reiterate, businesses are not obliged to pass the 15% tax relief across to their customers by dropping their prices. It is up to each individual company to decide how to incorporate the 15% VAT cut into their business.
In addition, those businesses that deferred their VAT bills are to be given more breathing space through a new and improved payment scheme. The new payment scheme provides businesses with the option of paying back their deferred VAT bills in smaller instalments, helping balance the books. Rather than paying a lump sum in full at the end of March 2021, businesses can make 11 smaller interest-free payments during the 2021-2022 financial year.
Pay As You Grow – Flexible Loan Repayments
For those businesses who took out a Bounce Back Loan earlier on in the pandemic, the Government have introduced the Pay as You Grow flexible loan repayment scheme. Initially the loan would have had to have been paid off within 6 years. However, this has now been extended to 10 years, meaning monthly repayments are cut by nearly half. There will also be interest-only periods of up to 6 months and payment holidays available for businesses.
If you are unsure about how to integrate the Government’s Winter Economy Plan into your business, then we’re here to help. At the ELAS Group, we provide employment law and HR advice to thousands of companies nationwide. Our employment law services include:
24 hour employment law advice line
Contracts of employment
Employment law documentation
Covid-19 advice and support
Tribunal preparation and representation
For more information on how we can support your business during this challenging time, please contact:
Ronnie McCullough on Ronnie.Mccullough@elas.uk.com or call 07584 192601.
*all content was correct at the time of writing.
The following links will provide you with the latest information available from the Public Health Agency in relation to the Coronavirus outbreak.
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