We are still waiting for detailed guidance on the new scheme, but we have been given enough information to start planning. Generally the scheme is a lot less beneficial to employers that the furlough scheme, as it carries a lot more cost for the employer. Nevertheless, some employers will welcome it as at least providing some support when furlough ends.
It can be used for employees who are on payroll on or before 23rd September (NB a Real Time Information submission to HMRC for the employee must have been made on or before that date, so in reality they would have needed to be on payroll in most cases in August). The employee must work at least 33% of their full contractual hours to be eligible – although this minimum level may be increased from 1st February 2021 (to be confirmed).
The employer must pay the employee for the hours worked. In addition, they must pay the employee for 2/3 of the time that is unworked. The employer can then claim back under the scheme 1/3 of the hours not worked up to a cap of £697.92 per month. Here are a few examples for someone who is contracted to work 5 days each week and is paid £1,500 per month:
Hours worked: 2 days 3 days 4 days
Employer pays for hours worked: £600 £900 £1,200
Employer pays 33% of the unworked hours: £300 £200 £100
Total Employer cost*: £900 £1,100 £1,300
Government pays 33% of unworked hours: £300 £200 £100
Total paid to employee: £1,200 £1,300 £1,400
Percentage of full pay: 80% 87% 93%
(* not including NI and Pension costs)
You do need an agreement with the employees to work these reduced hours. You may have the contractual right to place them on short-time working, in which case you will need to write to them setting out the arrangement. Otherwise you will need a written agreement with them to allow this to take place.
It is possible to move people from this scheme and back onto full hours on an intermittent basis. The minimum period for each arrangement is one week.
Here is the Government factsheet containing the basic information on the scheme. |