Updates on the Job Retention and Self-Employed Scheme
Whilst some lockdown restrictions are now being lifted, the government business support schemes are still continuing. Two of these schemes have seen some major changes in recent government announcements. The details of these scheme updates are as follows.
Coronavirus Job Retention Scheme
This scheme allows employers who are suffering a downturn in business during the crisis to furlough employees instead of making them redundant. Furloughed employees are paid at least 80% of their normal wages (up to a maximum of £2,500 per month each). Employers are currently able to reclaim this 80% wages cost, plus the associated Employer’s National Insurance and Pension Contributions.
This scheme will continue to operate on this basis until the end of July. From that date the scheme is to be modified so that not all of the cost of furloughed employees wages will be covered. The change is to be implemented over three months as follows:
• From 1 August 2020 the scheme will cease to cover the Employer’s National Insurance and Pension Contributions. It will continue to cover the 80% wages of employees.
• From 1 September 2020 the amount that is reclaimable under the scheme will drop to 70% of normal wages (up to a maximum of £2,187.50 per employee). Employers will still need to pay furloughed employees at least 80% of their normal wages, subject to a maximum of £2,500 each.
• From 1 October 2020 the amount that is reclaimable under the scheme will drop to 60% of normal wages (up to a maximum of £1,875 per employee). Again employers will still need to pay their employees at least 80% of their normal wages, subject to a maximum of £2,500 each.
• From 1 November 2020, barring later announcements, the scheme will cease entirely.
This change in the scheme is accompanied by a relaxation on the rules for part-time working. Up until now, furloughed employees have not been able to do any work. From 1 July 2020, employee will be able to return to work part-time and still be eligible for furlough. Furlough wages will be due for the days not worked and reclaimable as noted above. Days worked will have to be paid at full rate and no reclaim will be possible.
To prevent abuse of this relaxation, the scheme is to be closed to new employees from 30 June 2020. At that date all furloughed employees must have been on furlough for at least three weeks to continue to be eligible. This means the latest date they can be furloughed from is 10 June 2020.
Self-Employed Income Support Scheme
This scheme is intended to provide support for self-employed people in a similar fashion to the Job Retention Scheme. Initially, eligible self-employed individuals could claim for three months of income, based on 80% of their average trading profits (capped at £7,500 total). This covered the period from March to May 2020 with the scheme becoming open for claims in mid-May.
This scheme has now also been extended, with a second grant that should be claimable from August. This will be for a further three months, with the amount reclaimable being 70% of average trading profits (capped at £6,570 in total). This second grant is subject to the same eligibility criteria as the original grant.
This announcement included a deadline for claiming the original grant. Self-employed individuals will need to ensure that they claim this no later than 13 July 2020.
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