Job Support Scheme update

In recognition of the challenging times ahead, the Chancellor, Rishi Sunak, yesterday announced that he would be increasing support through the Job Support Scheme (JSS), which replaces the existing ‘furlough’ scheme on 1 November 2020.  Note it was announced on 31 October 2020 that the Coronavirus Job Retention (CJRS) otherwise known as the Furlough Scheme is to be extended until December.  The Job Support Scheme will be postponed until the extended CJRS ends.

The JSS provides different types of support to businesses according to their circumstances. Businesses that can continue to operate but face decreased demand can get support for wages through the JSS Open. Businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by any of the four governments of the UK can claim support through the JSS Closed.

Key points that apply to both schemes are noted below:

• Employees on an RTI return by 23 September 2020 who then leave can be rehired and included in the scheme
• Employees can undertake training during working hours
• Eligibility is automatic for Small and Medium Enterprises, which broadly means having less than 250 employees. We expect any connected companies to be included in this test
• Large employers (with 250 or more employees) will have to meet a financial impact test, so the scheme is only available to those whose turnover has stayed level or is lower now than before experiencing difficulties from Covid-19. The turnover test will broadly be based on VAT returns indicating a reduction in sales for the quarter ending 7 November 2020 as compared to the same quarter in 2019
• Grants received under each scheme will count towards the minimum income threshold for the job retention bonus
• Claims will have to be split up to 31 October 2020 following the existing Coronavirus Job Retention Scheme (i.e. furlough) rules and from 1 November 2020 following the new JSS rules even if this falls within one pay period.

Both new schemes are considered in more detail below:

JSS Open – employers facing decreased demand due to coronavirus

When originally announced, the JSS required employees to be working 33% of their normal hours with their employers paying a third of their wages for hours not worked.

Yesterday’s announcement reduces the employer contribution to those unworked hours to just 5% and reduces the minimum hours requirement to 20%.  This means that an employee who works just one day a week should be eligible.

The key details are noted below:

• The new scheme will run from 1 November 2020 to the 30 April 2021, but the increased support will be reviewed in the new year
• The employee must be working at least 20% of their usual hours. The definition of ‘usual hours’ is complex and guidance can be found here at section 5.2:

https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme

• For the time worked, employees must be paid their contracted wage
• For time not worked, the employee will be paid up to 2/3rds of their usual wage, where it does not exceed the cap. For salaried employees, usual wages are broadly the higher of reference pay under the existing furlough scheme or pay as at 23 September 2020. For variable staff, usual wages are the higher of:
• Wages in the corresponding period during 2019/20;
• Average wages in 2019/20; or
• Average wages from 1 February 2020 (or start date if later) to 23 September 2020
• The Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing 5% of non-worked hours up to a cap of £125 per month. These caps are based on a monthly reference salary of £3,125
• Employees do not have to have been furloughed previously, but must have been included on a Full Payment Submission lodged by midnight on 23 September 2020
• Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short time working arrangement must cover a minimum period of 7 consecutive days
• Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, which will remain payable by the employer. Employers will be able to make their first claim online on 8 December 2020
• It will only be possible to submit one monthly claim regardless of the pay frequency
• Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee
• Short time working agreements must be made in writing in the same way as furlough agreements
• Employers should continue to be eligible for the £1,000 Job Retention Bonus.

Example

If an employee is paid £3,000 per month and worked 80% of their normal hours, their pay for the month would be as follows:

 

	£
Pay for hours worked (£3,000 x 80%)	2,400
Pay for hours furloughed (£3,000 x 20% x 66.67%)	400
Total pay for month	2,800
Job Support Scheme breakdown:	£
Government contribution (£400 x 61.67/66.67)	370
Employer contribution (£3,000 x 20% x 5%)	30
	400

 

In addition to the employer’s salary payment of £2,430 they will be required to pay employer’s NIC and employer’s pension contributions based on the gross salary of £2,800.

The Government have produced a factsheet on the JSS Open, which can be found here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/928761/JSS_Open_factsheet.pdf

JSS Closed – employers who are legally required to close their premises

The JSS Closed will apply to employers that have been legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK.

For these businesses, the Job Support Scheme, through JSS Closed, is aimed to help them through the period that they are directly affected by these restrictions by supporting the salary costs of employees who have been instructed to cease work in eligible (closed) premises.

Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, up to a maximum of £2,083.33 per month.  An employer has discretion to pay more than this if they wish. Details of how to calculate this will be published at the end of October.

The objective of the JSS Closed is to help protect employee incomes, limit unemployment and retain employer-employee matches so that these premises are able to reopen as quickly as possible when circumstances allow.

Employees may also be entitled to additional financial support, including Universal Credit.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm.