The Chancellor announced on 22 October 2020 amendments to the Job Support Scheme (JSS), which will be open on 1 November 2020 and will run for 6 months until 30 April 2021 with a review in January 2021.
There are 2 schemes within the JSS, Job Support Scheme Open (JSS Open) and Job Support Scheme (JSS Closed). The government published a 17 page guidance document detailing the schemes with further guidance to come by the end of October! We have reviewed this guidance and here are the key areas:
JSS Open is for those business operating but facing decreased demand giving them the option of keeping employees in a job on shorter hours rather than making them redundant. The government have now increased the scale of support compared to what they originally announced in September 2020.
Employee will need to work a minimum of 20% (not 33% as originally announced) of their usual hours and the employer will need to pay them as normal for those hours worked. The employee will receive 66.67% of their normal pay for the hours not worked, this will be made up of 5% (up to a maximum £125 per month) from the employer with the discretion to pay more than this if they wish. The government will pay the remainder of 61.67% for the hours not worked up to a maximum of £1,541.75 net per month. This will ensure that the employee will receive at least 73% of their normal wages, where they earn £3,125 gross a month or less.
Employers will need to ensure that minimum wage rates are paid for all hours worked or treated as worked.
All SMEs are eligible and employers with more than 250 employees can claim on the 23 September 2020 the JSS Open if their turnover has remained equal or has decreased compared to the previous year. They will need to complete a Financial Impact Test to show their income has been impacted by coronavirus . Charities with more than 250 employees are exempt and will not need to carry out a test.
JSS Closed is for those businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by one of the four governments of the UK.
Business premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible.
An employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by the employer and fully funded by the government, to a maximum of £2,083.33 per month. It is the employers discretion if they want to pay more.
Once the restrictions have been lifted employers will not be able to claim.
Agreement (JSS Open and JSS Closed)
To be eligible for the grant , employers must have reached a written agreement with their employee that they have been offered a temporary working agreement. This temporary working agreement must cover at least 7 consecutive days. HMRC may want to see this agreement and must be kept on record for 5 years. Employers must record the hours the employees work and the number of usual hours they are not working.
Employers must make sure that employment, equality and discrimination laws still apply and will need to consider this when deciding to whom they offer the reduced hours.
JSS Open and JSS Closed
- An employer can claim the JSS Open and JSS Closed grant at the same time for different employees but cannot claim for a single employee under both schemes at the same time.
- Employers can only claim for employees that were in their employment on 23 September 2020. If employees ceased employment after 23 September 2020 and were subsequently rehired, then the employer can claim for them.
- 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.
- Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
- Employers will need to pay NICs and pension contributions.
- Employers can still claim the Job Retention Bonus.
- Employers will be able to make their first claim from 8 December 2020 and will be able to claim in arrears for salary monies already paid.
Reference salary for employees with fixed pay
For employees who are paid a fixed salary, the Reference Salary is the greater of:
- the wages payable to the employee in the last pay period ending on or before 23 September 2020
- the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme
Reference salary for employees with variable pay
For employees whose pay is variable the Reference Salary is the greater of:
- the wages earned in the same calendar period in the tax year 2019 to 2020
- the average wages payable in the tax year 2019 to 2020
- the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020
Average worker on furlough
· Andrew normally works 5 days a week and earns £1,400 a month, working in a
restaurant in the hospitality sector. His company is suffering reduced sales due to coronavirus. Rather than making Andrew redundant, the company puts Andrew
on the Job Support Scheme, working 20% of his usual hours.
· His employer pays Andrew £280 a month for these hours.
· For the time he is not working (80%), he will get 66.67% of his pay for that time. His total wage package is 73%, equal to £1,027.
· The Government will give a grant worth £691 (61.67% of hours not worked) to Andrew’s employer to support them in keeping Andrew’s job, and his employer will pay a further £56 for hours not worked (5% of wages).
· In addition, the employer will cover the Employer NICs and auto enrolment pension contribution on the payment (£56).
· His employer may also be eligible for the Job Retention Bonus worth £1,000, this would cover 94.6% of the employer’s total costs for retaining Andrew on the JSS between November and January.
· Any household, with no children or disabilities, that is entitled to UC will see an increase in their entitlement if their earnings fall, equal to 63p per £1 of earnings lost.
There is very detailed and complex rules around working out “normal hours” in the published policy paper and it is advised that employers should review this to ensure that they are calculating correctly.
Interestingly the guidance highlights that employees are able to check if their employer has made a JSS claim relating to them via their Personal Tax Account. In fact, it states that HMRC intend to publish the names of employers who have used the scheme and are considering publishing details of employers who are charged a penalty because of a deliberately incorrect JSS grant claim.
The government have said that there is to be further published guidance by the end of October 2020 on the following areas:
- Parental leave- to avoid parents losing out on their entitlement.
- What is to be included in the written agreement.
- Further conditions of eligibility for JSS Closed.
- Reference salary for JSS Closed.
The good news (if there is any!) is that we are able to provide you with a compliant written agreement.
Get in touch with our HR Consultants and Employment Solicitors to discuss your situation!