In the Chancellor’s Winter Economic Plan, he announced a new Job Support Scheme that replaces the current Job Retention Scheme and furlough. He then gave updated guidance on 22 October 2020 following pressure from businesses placed into Tier 2 and 3 lockdowns.
What is the Job Support Scheme?
The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. It provides different types of support to businesses according to their situation.
Businesses that are operating but facing decreased demand can get support for wages through JSS Open. Those businesses that are 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 can get the support they need through JSS Closed.
If my business is facing decreased demand, what is the JSS Open?
Many employers can operate safely but continue to face reduced demand so they may need extra support over the winter to keep their employees attached to their workforce. For these employers, the Job Support Scheme, through JSS Open will give employers the option of keeping their employees in a job on shorter hours rather than making them redundant.
The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked. Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government. The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish. The government will pay the remainder of 61.67% of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.
Is my business eligible for JSS Open?
All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).
The government expects that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance.
For the Government’s detailed guidance on Eligibility criteria for the JSS, please click here.
What if my business is closed due to COVID restrictions?
For those businesses that have been legally required to close their premises as a direct results of coronavirus restrictions set by one or more of the four governments of the UK will be helped through the JSS Closed.
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, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish. Employees may also be entitled to additional financial support, including Universal Credit.
Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.
Employers cannot claim both JSS Open and JSS Closed in respect of a single employee for the same day.
What do my employees have to do?
Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made from 6 April 2019 up to 11:59pm 23 September 2020.
Employees can be on any type of contract, including zero hours or temporary contracts. Agency workers are regarded as employees of an employment agency for the purposes of this scheme, provided they are employees for Income Tax purposes.
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 seven days.
Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
What does the grant cover?
For the JSS Open grant, this will cover the hours not worked by employees up to £1,541.75 per month, with the employer paying up to £125 per month for those same hours.
For the JSS Closed grant, this will cover two thirds of an employee’s normal pay up to a maximum of £2,083.33 per month.
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, although these contributions will remain payable by the employer.
“Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme, the government’s details of the calculations can be found here.
Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked.
The government expects that employers can top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
What does it mean to be on reduced hours?
The employee must be working at least 20% of their usual hours for the JSS Open.
For the time worked, employees must be paid their normal contracted wage.
For time not worked, the employee will be paid up to two-thirds of their usual wage.
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.
How can I claim?
The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through the GOV.UK website from 8 December 2020. They will be paid on a monthly basis.
Grants will be payable in arrears, meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
More detail about this process will be published in guidance by the government, by the end of October 2020.
What HMRC checks will there be?
HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information.
Grants can only be used as reimbursement for wage costs actually incurred.