From 1 November 2020, the Coronavirus Job Retention Scheme (JRS), which saw the advent of furlough, will be no more, and in its place will be the new Job Support Scheme (JSS).
The JSS will provide continued wage support to employers over the winter months until 30 April 2021. For those employers that have successfully reintegrated employees into their business on part-time hours (including under the flexible furlough scheme) the JSS is likely to be welcomed, particularly those businesses in the hardest hit sectors of hospitality, leisure and transport. The government will also be hoping that the JSS will be the much-needed confidence boost that other employers need to bring employees back to work after furlough and into part time positions. Unfortunately, however, the JSS will not be appropriate for all employers and certainly will not stem the tide of redundancies that we’ve already started to see. For the Chancellor has been very clear that Government funding via the JSS will only be available where there are viable roles for employees to return to. ‘Viable’ in this context means the employee must work at least 33% (a third) of their contracted hours.
With detailed Government guidance expected soon, this note summarises what we know now about the JSS and the areas upon which further clarification is still needed. We also recommend that you read the Government factsheet published on 24 September 2020 as it contains some useful worked examples: Coronavirus Job Support Scheme.
When does the JSS run from?
The Scheme will run from 1 November 2020. It is expected to last a minimum of six months, so up to 30 April 2020, but there’s scope for it to be extended if necessary. The government is expected to conduct an interim review of the minimum hours threshold after 3 months and may increase it.
Which employers are eligible?
All small and medium sized businesses will be eligible for the JSS, including those that have not previously accessed the JRS. Larger employers will only be eligible if they can demonstrate that their business has been adversely affected by the pandemic following a financial assessment. Details of the relevant thresholds have yet to be provided.
Which employees will qualify?
Those employees on the employer’s payroll on or before 23 September 2020 will qualify provided they are working at least a third of their normal hours. Employees do not need to have been furloughed previously to be eligible.
Is there a minimum claim period?
Employees can be moved in and out of the scheme, and do not have to work the same pattern each month to stay within the scheme, but there is a minimum period of a week for each eligible short-time working pattern.
Who pays what?
The employer must pay the employee at their normal rate for the hours that they work.
The cost of the unworked hours is then split three ways:
(i) the employer pays a third;
(ii) the government pays a third (up to a cap of £697.92 per month);
(iii) the remainder is effectively the employee’s contribution and is unpaid
So, an employee working 33% of their normal hours will receive 77% of their normal pay with the employer contributing 55% and the Government contributing 22% to the wage bill (assuming the Government cap is not engaged). The remaining 23% is unpaid.
An employee who works 60% of their normal hours will receive 87% of their normal pay with the employer contributing 73% and the Government contributing 13% to the wage bill (assuming the Government cap is not engaged). The remaining 13% is unpaid.
How does the JSS compare to the JRS?
How does the JSS work?
Similar to its predecessor the JRS, it will be for the employer to pay the employee’s wages in full and reclaim the relevant proportion of the wage costs (up to the relevant limits as appropriate) from HMRC via the online portal. Grants will be paid monthly in arrears for wages incurred. HMRC will be undertaking checks and payments will be withheld or need to be paid back if fraudulent or based on incorrect information.
Can I claim employer NICs or pension contributions under the grant?
No. Employers must meet the NICs and pension contributions on the wages paid.
Can I utilise the JSS for redundancy notice costs?
No. Employees cannot be made redundant or put on notice of redundancy during any period for which the employer is claiming the grant. This is to be contrasted with the JRS where the costs of notice pay could be reclaimed.
What documentation will I need to put in place with the employee?
As with the flexible furlough arrangements, where you are varying an employee’s hours and/or their pay under their contract of employment, you should agree these changes with the employee in advance and notify their new working hours and/or pay in writing.
What happens if I’m required to close my business due to Covid restrictions?
The government announced on 9th October 2020 that the JSS will be expanded to protect jobs and support businesses required to close as a result of Covid restrictions. In these circumstances:
– two thirds of employees’ wages will be paid by the government up to a maximum of £2,100 per month;
– the employer won’t have to contribute to an affected employee’s wages but will have to pay employer NICs and pension contributions.
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We expect the detailed guidance to provide much needed clarification on these and other areas:
- What’s the definition of a large employer and what financial metric must they meet (or fail) to be eligible?
- Will there be a cap on the employer contribution to the wage subsidy similar to the cap on the Government’s contribution or will it be uncapped?
- Will employer NICs and pension contributions be based on the total wages (including the Government’s contribution) or just the employer’s proportion?
If you would like more information on the JSS and how you might be able to utilise it for your business, please get in touch.