Coronavirus: Job Support Scheme (JSS) update

Businesses that are operating, but facing decreased demand, can now get support for wages through the "JSS Open" scheme.

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 UK nations can still get the support they need through "JSS Closed" - this remains unchanged from the original announcement.

For businesses that remain open, the scheme will require less financial input from employers, and employees will be eligible for support while working fewer hours than the original JSS scheme when it was first announced on 24 September.

What’s changing?

The key changes for employers and staff to be aware of are:

  • the employer contribution to the wage cost of unworked hours is reduced to 5%, and
  • the minimum number of hours the employee will have to work is reduced to 20%, rather than 33%, so those working just one day a week will now be eligible.

The original JSS plan would have meant employers paying one third of their employees’ wages for their hours not worked, as well as normal wages for the time actually worked, making the overall cost of retaining staff on part-time hours prohibitive for many businesses.

Employers can still receive the £1,000 Job Retention Bonus.

It’s worth noting that as well as a number of eligibility conditions and procedures that employers are likely to have to navigate, there will be important employment law and contract issues that will need to be considered, as well as written agreements entered into in certain situations, such as temporary working agreements.

HMRC is expected to publish further guidance on the content of such agreements by the end of October 2020 and we will update with you more details then.

The key points

Please note this is a summary of some of the key points from the policy paper. If you would like further details, we’ve included the relevant GOV.UK links at the bottom of this article.

Employers facing decreased demand (JSS Open)

The Job Support Scheme, through JSS Open, will give these employers the option of keeping their staff 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.

Employers who are legally required to close their premises (JSS Closed)

The Job Support Scheme, through JSS Closed, will help these employers through the period that they are directly affected by these restrictions by supporting the wage 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, to a maximum of £2,083.33 per month. Employers have discretion to pay more than this if they wish. This will 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.

Next steps for JSS

The Job Support Scheme will be open from 1 November 2020 and run for 6 months, until 30 April 2021. The government will review the terms of the scheme in January. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved.

Neither the employer nor the employee needs to have benefitted from the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.

Further guidance on the steps that employers need to take to calculate and make a claim to the Job Support Scheme will be published by the end of October.

Eligibility criteria

There are various eligibility criteria applying to all employers and/or employees being claimed for under the Job Support Scheme, whether the employer is claiming the JSS Open grant or the JSS Closed grant, and we’ve highlighted some of these below. There is also more specific eligibility criteria for the JSS Open scheme.

An employer can claim the JSS Open and JSS Closed grant at the same time for different employees. An employer cannot claim for a single employee under both schemes at the same time.

Who can claim

Employers will be able to access the Job Support Scheme if:

  • they have enrolled for PAYE online
  • they have a UK, Channel Island or Isle of Man bank account

Additional eligibility criteria will apply, depending on whether the employer is claiming a JSS Open grant or JSS Closed grant.

Employees who can be claimed for (JSS Open and JSS Closed)

  • Eligible employers will be able to claim the Job Support Scheme grant for employees who were on their PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. This means an RTI Full Payment Submission notifying payment in respect of that employee must have been made to HMRC at some point from 6 April 2019 up to 11:59pm 23 September 2020.
  • Employers can only claim for employees who were in their employment on 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them.
  • An individual is an employee for the purposes of this scheme if they are treated as an employee for Income Tax purposes.
  • 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 do not need to have been furloughed under the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
  • Employers will be able to top up employee wages above the level of minimum contributions at their own expense, if they wish.
  • Employers cannot claim both JSS Open and JSS Closed in respect of a single employee for the same day.

Training

Employees will be able to undertake training voluntarily in non-working hours. Where time spent on training attracts a minimum wage entitlement in excess of the grant payment, employers will need to pay the additional wages.
Working Tax Credits.

Employees whose hours reduce due to the COVID-19 pandemic will continue to have access to Working Tax Credit and its childcare element for the duration of the JSS scheme.

Parental leave

The government is planning to introduce parental pay legislation as soon as possible, covering maternity allowance, statutory maternity/paternity, shared parental, adoption and parental bereavement pay. This will avoid parents losing out on their entitlement to parental pay as a result of being put on the Job Support Scheme during the relevant assessment period.

More details on employee eligibility will be available in further guidance published by the end of October.

Employers facing decreased demand who can claim under JSS Open

In addition to the general Job Support Scheme eligibility criteria set out above, employers are eligible to claim the JSS Open if:

  • They have 250 or more employees on 23 September 2020 and have undertaken a “Financial Impact Test” demonstrating their turnover has remained equal or fallen, showing they have been adversely affected by Coronavirus restrictions. An employer with less than 250 employees on 23 September 2020 is not required to satisfy this test.
  • Some, or all, of their employees are working reduced hours that are at least 20% of their usual hours.

The policy paper expands on this financial impact test in a lot of detail for large employers.

There are also several rules relating to employees working reduced hours, National Minimum Wage and temporary working agreements, etc, which need to be considered further.

Who can claim JSS Closed?

In addition to the general Job Support Scheme eligibility criteria, employers are eligible to claim JSS Closed if their business premises at one or more locations has been legally required to close as a direct result of Coronavirus restrictions set by one or more of the four UK nations. This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/or drink outdoors.

Businesses premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for this scheme.

Note that Employers are only eligible to claim for periods during which the relevant Coronavirus restrictions are in place. Employers will not be able to claim JSS Closed to cover periods after restrictions have lifted and the business premises is legally allowed to reopen. However, they may then be able to claim JSS Open if they are eligible.

This is not a complete list of all the conditions for eligibility for JSS Closed and further guidance will be published by the end of October.

Employees who cannot work because of closed premises who can be claimed for under JSS Closed

Eligible employers will be able to claim the JSS Closed grant for employees:

  • • If their primary workplace is at premises which have been legally required to close as a result of Coronavirus restrictions set by one or more of the four UK nations.
  • • If the employer has instructed them to cease work for a minimum period of at least 7 consecutive calendar days.

This is not a complete list of employee eligibility requirements for JSS Closed and further guidance will be published by the end of October.

Again, there are several rules relating to employees working reduced hours, National Minimum Wage and temporary working agreements, etc, which need to be considered further.

Some conditions for claiming

There are several detailed conditions that apply to all employers using the Job Support Scheme. These conditions apply to all employers claiming JSS Open and JSS Closed, unless stated.

These include conditions relating to Redundancy, Pension contributions (not covered by the grant), and timing of grant reimbursements to employers, etc.

How to claim and interaction with other schemes

Employers will be able to make their first claim from 8 December 2020 on GOV.UK, covering salary for pay periods ending and paid in November. More details should be released by the end of October.

Be aware that HMRC will check claims and payments may be withheld if HMRC suspects a claim to be ineligible and will have powers to impose up to 100% penalties on overclaimed amounts. HMRC is also considering publishing names of employers who have been charged a penalty for making incorrect grant claims deliberately. The amount of any overpayment by the employer must be paid back to HMRC where a claim contains incorrect information.

Employers claiming the Job Support Scheme may still claim the Job Retention Bonus in respect of the same employee, if they are eligible. Grants claimed under the Job Support Scheme can be used by employers to pay an employee’s wages and help meet the Lower Earnings Limit of the Job Retention Bonus.

There may be instances where an employee’s pay period includes both eligible amounts to be claimed under the Coronavirus Job Retention Scheme (for a period where they were furloughed until 31 October 2020), and an amount in respect of the Job Support Scheme from 1 November 2020. The amounts to be claimed from each of the schemes should be calculated separately following the guidance for each scheme, accounting for the number of days that fall within each of the scheme’s timelines. No amount of gross pay should be included in more than one scheme.

For example, if an employee is paid a weekly salary each Friday covering the previous seven days, when they are paid on 6 November 2020 this will include their pay for the period Saturday 31 October 2020 through to Friday 6 November 2020. It will be necessary to follow the Coronavirus Job Retention Scheme guidance to calculate the claim for 1 day (being 31 October 2020) and then the remaining 6 days should be calculated following the Job Support Scheme guidance.

The calculated amounts should be claimed for separately and in accordance with the guidance for each scheme.

Calculations

There are indicative calculations on GOV.UK for JSS Open which we will need to consider further, along with comprehensive details on various other aspects and terms (e.g. reference salary, usual and variable hours) of the calculations. Further details of calculations should be available in the guidance expected to be published at the end of October 2020.

We will update you with further information when it becomes available.

Further guidance

For more information on the changes to the JSS for open businesses, you can read HMRC’s factsheet here: https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme.

For further information or advice on any of the issues raised, or for help with services like bookkeeping, cash flow management or payroll during the Coronavirus pandemic, please call us on 01225 325580, email info@richardsonswift.co.uk, or contact your usual client director.

Please note that this is only a summary of the main issues and should not be construed as advice. Every effort has been made to ensure factual accuracy at the time of publication (28 October 2020), however, the government response to the Coronavirus situation is changing 24-7, so it should not be relied upon completely.