As the UK is in the grips of a second wave of Coronavirus with local lockdowns aplenty and further restrictions imminent, we must be grateful for the little things – our health, a place to call home and food on the table. Everything else is just icing on the cake!
For dental practice owners the one simple thing they can do to help during the national crisis is to just keep paying the staff. But, if some of your staff are still on furlough leave and others have only been brought back part-time, the prospect of the “Coronavirus Job Retention Scheme” (CJRS) coming to an end on 31st October was probably slightly concerning. That’s why the Government announcement on 24th September regarding the creation of the new “Coronavirus Job Support Scheme” (CJSS) was welcomed by many and will provide much needed support to businesses and employees over the next six months.
The main difference between the retention scheme (CJRS) and the support scheme (CJSS) is that employees must be working at least a third of their usual hours to qualify for funding.
Much like the current furlough scheme, the support scheme is a grant – it’s treated as taxable business income and there is no requirement to pay it back. All small and medium sized businesses qualify for the funding and they can claim for any employees who were paid through the payroll on or before 23rd September (i.e. they don’t have to have been previously furloughed). This time round though, claims have to be submitted in arrears meaning that you would have to pay the staff before submitting a claim for CJSS funding (i.e. it’s likely practice owners will be out of pocket for at least seven to ten days between paying the staff and receiving the funds back from HMRC).
In short, the new CJSS scheme works as follows:
- An employee works part-time (a minimum of a third of their usual hours – e.g. 33%);
- Of the remaining non-working hours, the employer will have to pay for an additional third of those hours (e.g. 1/3rd of 67% = 22%);
- The Government will match that additional third up to a maximum of £697.92 per employee (22%).
The new CJSS will guarantee employees receive at least 77% of their usual pay but the onus is very much on matched funding – the Government will match the employers contribution. Below is a visual example of how it works:
Here’s another worked example:
Gloria (the dental receptionist) is contracted to work 35 hours per week at £9 per hour (£1,365 per month) but, since lockdown lifted, the surgery has only been able to open two days per week. Gloria is now working 14 hours per week and is furloughed / not working 21 hours per week. If a claim is made under the new CJSS:
- Gloria’s payment for hours worked in the month – 14 hours per week = £546;
- CJSS employer contribution (1/3rd of the 21 hours she’s not working) – 7 hours per week = £273;
- CJSS government contribution (1/3rd of the 21 hours she’s not working) – 7 hours per week = £273;
- Total gross pay due to Gloria before tax, NIC and pension = £1,092 (80% of her usual salary).
After the practice pays the employers national insurance (£50) and employers pension contributions (£17), the net monthly cost of employing Gloria for two-days would be £886.
When the retention scheme was first introduced back at the end of March, the Government covered up to 80% of the employees usual pay so it should be fairly clear that the support scheme is not as generous as the previous scheme. The above example highlights this as you can see that even though Gloria is only working two days per week, the practice will be paying her for the equivalent of three days’ work.
Government handouts can be seen as a free source of money and the new scheme is designed to get employers to think hard about their staffing levels and how their business will look in a post-pandemic world. The original retention scheme was an emergency bailout to keep the UK on its feet, whereas this new scheme is more long-term and aims to help businesses ride out the storm.
Obviously, there is no requirement for businesses to use the new Job Support Scheme. It’s just one of several options available as the next step for furloughed staff. You could:
- Bring back staff on their original contracted hours – this is the simplest option but the most expensive and may not be feasible if the practice’s income levels are not yet back to pre-coronavirus levels;
- Reduce your staff’s contracted hours – we would always recommend contacting your HR provider before attempting to revise employment contracts;
- Go through the process of making redundancies – further details on this subject can be found in an earlier blog.
If you’d like to find out more about how we can help to navigate your practice through the challenging times ahead, please call us on 01872 300232 or email email@example.com.