Job Support Scheme: new programme will help small businesses support staff

All small and medium-sized enterprises (SMEs) may take part in the Job Support Scheme, the latest government initiative, when it begins on 1 November. It replaces the Job Retention Scheme. The Treasury plans to keep the new programme in place for at least six months.

Ministers haven’t yet said how they will define SMEs, but are likely to adopt the standard definition: a turnover of less than £25m, fewer than 250 employees and assets of less than £12.5m.

Meeting the state halfway

The Job Retention Scheme has enabled employers to claim up to 90% of the cost of workers’ pay, including employers’ national insurance and pension contributions. Its replacement will require employers to meet more than half of these costs.

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Each member of staff enrolled in the scheme must work at least a third of their normal hours, with employers responsible for paying wages for this time.

For hours not worked, employees are entitled to two-thirds of their normal wages; the cost of this will be split equally between employers and the government, though the scheme caps the taxpayer’s contribution at £697.92 per month. That cap effectively means that workers earning up to around £38,000 a year are fully covered by the scheme. Employers also remain responsible for paying employers’ national insurance and pension contributions.

This means an employee working 33% of their normal hours and earning less than the £38,000 cap will receive 77% of their normal pay. Employers will be on the hook for 55% of normal pay (plus national insurance and pension contributions), with the state paying the other 22%.

The scheme can be used for any member of staff employed on 23 September. Staff are entitled to work more than a third of their hours and still be eligible, and there is no requirement to have previously been on furlough. Employers can vary their use of the scheme over time, but each working arrangement must cover a minimum pay period of at least seven days. The arrangements also have to be agreed in writing with staff.

You can’t put staff on notice of redundancy while they’re in the Job Support Scheme, a significant change from its predecessor. But employers can still claim the £1,000 bonus for staff who have previously been furloughed but remain on the payroll on 31 January 2021.

For SMEs with enough work to provide staff with at least some hours, the new scheme could be an important stopgap until business recovers. But firms still in real difficulty may now need to consider job losses when the furlough scheme comes to an end.

More help for the self-employed

For self-employed workers, further support comes in the form of two more rounds of the Self-Employment Income Support Scheme (SEISS), albeit with much less generous payouts.

The government will offer a third SEISS grant to cover the time from the start of November to the end of January, and a fourth payment for February to April. The third grant will be worth 20% of your trading profits for three months, up to a maximum of £1,875. That is much less than in the first two rounds, which capped payouts at £7,500 and £6,570. Nor has the Treasury announced what the fourth grant will be worth.

What you get will depend on your individual circumstances, but these extra rounds of the SEISS will work in the same way as before. Your grant is based on an average of your profits over the past three tax years, or your 2018-19 profits if you have been self-employed for less than three years.

Only those eligible for the current SEISS will be able to apply for the next two rounds. The basic eligibility criteria are that you must have filed a tax return for the 2018-19 financial year; you must earn more than 50% of your total income from self-employment; and your average annual profit must not exceed £50,000. You also need to have been adversely affected by Covid-19. The government hasn’t yet said when applications for the new SEISS rounds will open.