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Yesterday, Chancellor Rishi Sunak unveiled his “Winter Economy Plan”, within which the new Job Support Scheme was announced. The Job Support Scheme (‘JSS’) is intended partially to plug the gap left by the Coronavirus Job Retention Scheme (‘CJRS’) which comes to a close on 31 October 2020, but also to subsidise employers’ costs in a way which is more consistent with the recent message to re-open the economy. Unlike the CJRS (more commonly known as the ‘furlough scheme’), it will not provide a subsidy of wages for those for whom there is no work to carry out at present. Its central objective is to protect viable jobs within businesses which are facing lower demand over the winter months, as a result of COVID-19.
The important point to note, as ever, is that only headline particulars of the JSS have been published to date, most of which are contained in the HM Treasury’s fact sheet. The details provided raise a number of questions, which hopefully should be addressed when the further guidance promised by the Government is published.
When will the JSS be coming into force and for how long will it last?
The JSS will become live on 1 November 2020, representing a seamless transition from the CJRS when it comes to an end. It will run for a period of 6 months, until 30 April 2020.
What does the JSS entail?
The JSS is designed to subsidise employees’ wages in situations where they are required to work fewer than their normal hours as a result of the pandemic.
The hours which continue to be worked by an employee will be paid by the employer as normal. For those hours which are not worked, the Government and the employer will both contribute a third of normal wages (although the Government’s contribution will be subject to a cap). This means that those employees whose normal monthly wages do not fall above the Government cap should receive a minimum of 77% of their normal wages during the winter months.
How do I know if my business is eligible for JSS?
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NO requirement for employer or employee to have previously used the CJRS. |
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The business must have a UK bank account and UK PAYE scheme. |
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Large businesses (defined as those who are not SMEs) will be subject to a financial assessment test, and the JSS will only be available to those whose turnover is lower now than prior to experiencing COVID-19 related difficulties. SMEs will not be subject to such financial assessment. |
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There is an expectation that large businesses which are otherwise eligible for the JSS will not make capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. |
Which employees are eligible for the JSS?
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Employees must be on their employer’s PAYE payroll on or before 23 September 2020. This means that a Real Time Information (‘RTI’) submission to HMRC, notifying payment to that employee, must have been made on or before 23 September 2020. |
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Employees must be working at least 33% of their usual hours. After the JSS has been in operation for 3 months, the Government will consider whether to increase this minimum hours’ threshold. |
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During the period within which their employer is claiming the JSS grant, an employee cannot be made redundant or put on notice of redundancy. |
Do employers need to agree altered working hours with employees?
In short, yes.
As with the CJRS, the basic principles of employment law remain in force. Any change to contractual terms should be expressly agreed with the employees in question, and recorded in writing. HMRC has the right to request sight of such written evidence when processing claims under the JSS.
How does the JSS work in practice?
For every hour not worked by an eligible employee, both the Government and the employer will be required to pay a third each of the “usual hourly wage” for that employee.
The Government’s contribution will be capped at £697.92 per month.
In a situation where an employee is working exactly 33% of their normal hours.
How are “usual wages” calculated?
“Usual wages” will be calculated in a similar way to the methodology used under the CJRS; however, we have been promised further guidance to clarify this in the coming weeks.
Important to note is that employees who have been previously furloughed will have their normal contractual pay used to calculate “usual wages”, not the amount which they received whilst on furlough.
Is the Government contribution paid before or after an employee’s wages are due?
Government payments under the JSS will be made in arrears, reimbursing the employer for the Government’s contribution.
Will the Government contribution include Class 1 employer NICs or pension contributions?
No. However, these will remain payable by the employer.
Do employers have the option to “top-up”, to 100% of normal salary, the two-thirds contribution for hours not worked, in a similar way to the option under the CJRS?
Whilst the HM Treasury fact sheet does not expressly prohibit this, it states that “our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense”. Given that the JSS is intended to help businesses which have suffered as a result of the pandemic, it appears as if the Government is not expecting those who have the funds to pay a “top-up” to access the JSS in the first place.
Will employees be required to remain on the JSS for the entire six months?
No. Employees will be able to rotate on and off the JSS, and do not have to be working the same pattern every month. However, each short-time working pattern must cover a minimum period of seven days.
How does my business claim for the JSS?
Employers will be able to make a claim online, through the gov.uk website, from December 2020. Monies will be paid out to employers on a monthly basis.
As set out above, grants under the JSS will be paid in arrears. This means that claims can only be made in respect of a given pay period where payment to an employee has already been made by the employer, and that payment has been reported to HMRC via an RTI return.
Will HMRC check the validity of a claim?
Yes, HMRC has the power to review claims as it sees fit, and payments may be withheld, or required to be reimbursed, if a claim is found to be fraudulent or based on incorrect information.
This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact James Baker or Rachael Lloyd to discuss any issues you are facing.
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