If your business employs staff then COVID-19 has added more pressure, the Job Support Scheme and Planning is vital. You want to look after your employees and their welfare, but also the payment of those employees and the cash flow situation, that that creates when income has been impacted negativity.

This week’s episode of I Hate Numbers looks at the new Job Support Scheme, Furlough scheme mark 2.

There are six things I'm going to cover in this podcast.

• Overview of the new job support scheme
• Conditions to make a claim
• Job retention bonus
• Rules
• Numbers
• Cash flow and decision making

Listen to learn more

Job Support Scheme Overview

The job support scheme starts on the first of November, and it's initially set to run up until the end of April 2021. It will be divided into two phases, the first three months, and then three months into the scheme the government then will overview how its progressing, any changes to the scheme it will announce in due course.

There are two schemes, in common with the current furlough scheme is to provide payments to employers who retain employees do not make them redundant.

Conditions

Under scheme one, your employee must do a minimum level of work. If, however, your business has been forced to shut down because of local lockdown restrictions imposed, then the requirement of your employee to work a minimum level of time is waived.

Listen to learn more

Cash flow timing

If you have to contribute towards your employees pay then you pay before you claim. That’s important to remember when it comes to cash flow planning.

There’s some cash flow pain. You've loss of income, money being paid, hours may not be there to justify bringing them in.

Listen to learn more

Job Retention Bonus

The Job Retention Bonus may soften the blow. There is a £1,000 one-off taxable payment to you (the employer), for each eligible employee that you furloughed and kept continuously employed until 31 January 2021.

You’ll be able to claim the bonus between 15 February 2021 and 31 March 2021. You do not have to pay this money to your employee.

Compliance

There will be rules and regulations, critical that you maintain adequate records to backup and verify your claim. Employment law is not ignored. Your staff have to agree to a reduction in their wages and hours.

HMRC will be focusing efforts on those that have taken advantage of the scheme or claimed incorrectly. Expect assertive action over the next few months.

Decision time

There is a very choppy business landscape ahead, if you do have a staff team and you wish to retain that talent, then there's tough decision making that lies ahead. When faced with any tough decisions, you must always, always do a cash flow plan, a cash flow story.

Cash flow

It may be that your business can weather the storm and knowing what the cost will be to you as a business for retaining the staff, under the job support scheme is a vital input into that cash flow story.

Do not panic, your cashflow story may reveal that you can weather and survive the storm that lies ahead. Stay sanguine, positive and centred.

Listen to find out more

Conclusion

In conclusion, Job Support Scheme and Planning go hand in hand. Don't forget the Job Retention Bonus. Include this into your future cash flow forecasts. Consider the steps you need to take to keep your business dial moving forwards.

Detailed illustrations, in the show notes link.

Your business needs to grow, serve and make money. Cash flow planning plays a vital part in you taking decisions, and what is right for your business. Contact us to find out more.

What Next

Make yourself comfortable. Sit back and listen.

Even better subscribe so you do not miss an episode.

In This Episode

• Understanding the Job Support Scheme
• Appreciate what the conditions are and consider required evidence
• Decision making and dealing with financial challenges
• Developing your future cash flow story
• Developing your own Numbers confidence and decisions
• Take more control of your numbers to help make you money, survive and thrive

Links

https://podcasts.apple.com/podcast/proactiveresolutionss-podcast/id1500471288

https://play.google.com/music/m/I3pvpztpjvjw6yrw2kctmtyckam?t=I_Hate_Numbers

https://open.spotify.com/show/5lKjqgbYaxnIAoTeK0zins

https://www.stitcher.com/podcast/proactiveresolutionss-podcast

https://tunein.com/podcasts/Business–Economics-Podcasts/I-Hate-Numbers-p1298505/

You are listening to the I Hate Numbers Podcast with Mahmood Reza. The I Hate Numbers podcast mission is to help your business survive and thrive by you better understanding and connecting with your numbers. Number love and care is what it's about. Tune in every week. Now, here's your host, Mahmood Reza.

If you're a business owner that employs staff and that includes employing yourself for your limited company, then Coronavirus would've had an extra impact in terms of your wellbeing and your planning, in terms of balancing up the needs of your employees, making sure that you want to look after your employees and their welfare, but also the payment of those employees and the cash flow situation that that creates when income has been impacted negatively.

Folks, my name is Mahmood. I'm the host of a weekly podcast I Hate Numbers. I'm an accountant that looks to strengthen business owners' money mindset, save time, and make more money. In today's podcast, I want to focus on a new government scheme that's being rolled out on the 1st of November, and that new scheme for employers is the job support scheme.

There are six things I'm going to cover in this podcast. One is an overview of the new job support scheme, what I would call furlough scheme mark two, an overview of the conditions that are necessary to claim under the scheme, money i.e the payments, job retention bonus, the compliance. Yes, there are rules that you have to maintain and stick to and what you do with all this information. As a heads up, all the detailed number calculations, which I've provided, and there are some more detailed illustrations

in the show notes link. To drown anybody with a plethora of numbers, more so that we've got a good understanding of how the new job support scheme will work. Let's get on with the broadcast. Now, the first thing is the overview of the scheme. The job support scheme starts on the 1st of November and is initially set to run up until the end of April, 2021.

It'll be divided into two phases, the first three months, and then three months into the scheme, the government then will overview how it's progressing and any changes to the scheme, they’ll announce in due course. The new job support scheme effectively replaces the furlough scheme, which is due to expire at the end of October.

There are two schemes. What they both have in common, and then what they have also in common with the furlough scheme that's currently in operation in October is they're there to provide payments to employers who retain employees, do not make them redundant. Under scheme one, your employee must do a minimum level of work.

Currently, 33% or a third of their regular hours must be worked, for which they must receive the normal regular pay. If, however, your business has been forced to shut down because of local lockdown restrictions imposed, then the requirement for your employee to work a minimum level of time is waived. If your business circumstances are such that as an employer, you have to part-time furlough your staff, there's not sufficient work,

there's not sufficient demand to justify a full-time working week or working month, then the job support scheme is there to provide some financial support. Having satisfied the conditions, let's look at scheme one, and let's throw some numbers in just to give it a bit more resonance. Let's look at two examples.

One for a weekly-paid employee and one for a monthly-paid employee. Serena, a weekly-paid employee, earns a regular wage of 420 pounds. Serena works half of that week and the other half of the week she's on furlough. Her gross pay for working half that week will be 210 pounds. For the time that she hasn't worked, equivalent to two and a half days in that week, or 210 pounds, that will then be split three ways.

A third of it she'll absorb as a shortfall in her wages, a third of it, the government will contribute, and a third of it, the employer will top up. So, for working half that week, Serena's pay packet will be 350 pounds. The government will contribute 70 pounds. The employer will top up with 70 pounds, and Serena will lose out by 70 pounds.

Same principle applies to monthly pay. You get paid for the time that you've worked. The minimum amount of time the employee has to work is 33%. So, taking Serena who is on a monthly payroll of two and a half thousand pounds per month, if she works 50% of the time, her pay for the time work will be 1,250.

The employer will then top up a third of the hours not worked, for the government, will contribute one third as Serena will absorb that one third shortfall on her salary accordingly. So, her gross pay will be 2083. I mentioned that there was a scheme two and scheme two is where your business has been forced to close due to local lockdown restrictions.

In that case, then there is no employer contribution required, and the government via the job support scheme will contribute up to 2,100 pounds per month for each employee. In respect to the job support scheme, by the way, the cap per employee is 698 pounds per month, or the equivalent of 161 pounds per week.

Check out the show notes for more detailed numbers and calculations. Under both schemes, the employer will be expected to pay the employer's national insurance contributions and the pension contributions. It's worth noting under scheme one, that the employer must pay two thirds of the shortfall for the hours not worked initially, and then claim the element back from the government.

So, this is a change to the previous scheme. So, if we take the example of the 420 pounds per week for Serena, where she works half of that week, the shortfall for the pay for the hours not worked off 210, the employer i.e. you will pay 140 pounds, first of all, and then claim 70 pounds back, and that's really important to remember when it comes to cash flow planning.

It's also worth noting that under the job support scheme, the employer contribution is higher compared to the current furlough scheme, which is due to expire at the end of October. Taking the 420 pounds per week, a regular example, that's an extra 28 pounds per week where 50% of the regular wages paid, and if you look at the monthly equivalent, that's 167 pounds extra.

Again, important to factor in when we do our cash flow planning. And when we talk cash flow, check out previous podcasts where we've talked about putting together your cash story. We looked at the overview of the job support scheme, due to kick in on the 1st of November. We've looked at some of the conditions of the scheme.

We've looked at what the payment aspect is for the employer and what one can claim back from the government. Remember, scheme two, where your business has been forced to lock down, to shut because of restrictions, then no employer contribution is required. We've potentially got a lot of cash flow paying here.

We've got a loss of income. We've got money being paid out to employees who are unable to work. The hours may not be there to justify bringing them in. There is a job retention bonus that might soften the blow. Now, the job retention bonus works as follows. If you previously furloughed staff and you employ them up to and including the 5th of February, 2021, and they receive a total

of at least 1,560 pounds, and they get paid in each individual month something, then you qualify for the bonus and you'll get 1000 pounds per each employee that you retain. The job retention bonus also applies to those businesses that put employees on furlough. Under the job support scheme, the same conditions apply.

You must retain those employees, pay them at least 1,560 over a three month cycle up to the 5th of February, 2021, and they must receive something in each individual month, then you qualify also for the 1000 pound bonus. The bonus, by the way, will not be paid out until mid February, 2021. Important to factor that in in terms of your cash flow planning.

The last couple of things I want to talk about is compliance of which there will be rules and regulations, absolutely critical that you maintain adequate records to back up and verify the time that each employee spends. Remember that employment law is not circumvented here, so there has got to be agreement by staff that they agree to a reduction in their wages.

You must also keep evidence to back up your claims that employees have not been working. HMRC is gathering resources and will be focusing its efforts on those that have actually taken advantage of the scheme or claimed incorrectly. So, expect some assertive audit action over the next few months.

If your house is in order and the records back up your claims, then everything should be fine. Son of fellow scheme mark two. We've talked about the key conditions, those key conditions being its payments to employees, so subcontractors do not count, do not qualify. We've talked in terms of a minimum amount of time they've got to work unless you are claiming under scheme two where your business has been forced to close down because of local lockdown restrictions.

We've talked in terms of the payments made by employers. Again, it doesn't count if your business has been forced to shut down. There is no employer contribution required. We've talked about the job retention bonus worth 1000 pounds per employee, and we talked about compliance. One area that you need to do, and again, you need to make sure you've not only got the evidence to back it out, but you've also got an audit trail where you've actually communicated with the employees where they've actually agreed to the scheme.

We face a very choppy landscape ahead of us in business, and if you do have a staff team and you wish to retain that talent, then there's some tough decision-making that lies ahead. When faced with any tough decisions, you must always, always do a cash flow plan, a cash flow story. It may be that your business can weather the storm and knowing what the cost will be to you as a business for retaining the staff under the job support scheme is a vital input into that cash flow story.

Remember the bonus. That may offset and modify some of the payments out. There will be a higher cost under the job support scheme compared to the current furlough scheme. Remember, don't panic. Your cash flow story may reveal that you can weather and survive the storm that lies ahead. Okay, folks, I hope you got some value from this podcast,

from this episode on the job support scheme. Check out the show notes for links to actually more detailed work examples. If you need any support in your business on the job support scheme, what it means, then by all means, get in touch with us. Faith in that, stay sanguine, stay positive, and stay centred.

We hope you enjoyed this episode and appreciate you taking the time to listen to the show. We hope you got some value. If you did, then we'd love it if you shared the episode. We look forward to you joining us next week for another I Hate Numbers episode.