On the go: The new job support scheme announced by the government on Thursday will increase the risk of employers miscalculating pension contributions for employees, a law firm has warned.
As the previous Coronavirus Job Retention Scheme is set to end on October 31, UK chancellor Rishi Sunak announced a new plan that will see the government contributing towards the wages of employees who are working fewer than normal hours due to decreased demand.
The scheme will only be open to employees who work at least a third of their normal hours. These hours will be paid for by their employer, while the government and the employer will each pay a third of the remaining hours not worked.
That would mean an employee working 33 per cent of their usual hours would receive 77 per cent of their normal wages. It would mean businesses pay 55 per cent of those workers’ regular salaries.
The scheme will run for six months, starting from November, and all small and medium-sized businesses are eligible to apply. Larger businesses will have to show that their turnover has fallen in order to be eligible.
Despite the relief it can bring to struggling businesses, the scheme has the potential to cause confusion when it comes to pension contributions.
Anne-Marie Winton, partner at Arc Pensions Law, said the new changes could “generate significant additional confusion among already stressed and confused employees and employers about how to correctly operate automatic enrolment”.
“The potential for errors is huge, so I would hope that there will be a very lenient approach from the Pensions Regulator to accidental non-compliance,” she added.
