What does this mean for charities?
As we saw in the early days of the CJRS, the New Scheme is accompanied by only brief guidance, providing basic information on how it will work and who can use it. We anticipate the guidance will be expanded in the coming weeks as questions are raised about how the New Scheme will work in practice.
Here are the main points for charities to note:
- The New Scheme will open on 1 November 2020 and will run for six months.
- The New Scheme is designed to support 'viable jobs' in organisations facing lower than usual demand over winter due to COVID-19. This means that in order to benefit from the New Scheme, staff will have to work (and be paid for) at least one-third of their contracted hours for the first three months of the New Scheme. The Government has reserved the right to increase the minimum working hours requirement after the New Scheme has been in operation for three months. It will no longer be possible to keep staff at home full-time and claim financial support from the Government towards the cost of their wages.
- For every hour not worked by the employee, the Government and the employer will each pay a third of the employee's hourly wage. The Government's contribution will be capped at £697.92 per month and will be paid in arrears as a reimbursement to the employer. The grant will not cover Class 1 employer NICs or pension contributions, which remain payable by the employer.
- Employees will be able to cycle on and off the New Scheme and will not need to be working the same hours each month, although each short time working arrangement must cover a minimum seven day period.
- 'All employers' with a UK bank account and PAYE scheme can claim the grant. We understand this to mean charities will be eligible for the New Scheme. It is not a requirement to have previously used the CJRS. However 'larger businesses' will need to meet a financial assessment test, demonstrating their turnover now is lower than before the pandemic. No financial assessment will be required for small and medium enterprises.
- We do not currently know how substantial a charity needs to be to qualify as a 'larger business' for the purposes of the New Scheme. Further guidance on this is expected shortly.
- In contrast to the CJRS, employees cannot be made redundant or given notice of redundancy whilst the charity is using the New Scheme.
It is clear the Government wishes to draw important distinctions between the CJRS and the New Scheme. There is a marked difference in the employer eligibility criteria, the detail of which is yet to be fully explained. The option to keep staff off work full-time whilst maintaining their employment has also been removed, as has the option of making staff redundant whilst also claiming financial support from the Government.
All these differences demonstrate the New Scheme is aimed at getting people back to work in some capacity. What it does not address is a situation where the charity does not have work to provide to its staff.
Charities considering their use of the New Scheme should therefore satisfy themselves now of the ongoing viability of affected staff roles. Regrettably, if charities reach the conclusion that particular roles are no longer viable and this is not likely to change over the coming months , it may be prudent to consider taking action now to restructure their workforce, whilst the CJRS continues to run and before seeking support from the New Scheme.
For advice on the Job Support Scheme, please contact Joanne Oliver in our Charities team on 07733 226 212 or complete the form below.