The Job Support Scheme (JJS) has been postponed until the Coronavirus Job Retention Scheme (CJRS) closes, at the earliest. The CJRS is due to close on 31 March 2021.
Further guidance on the new scheme was issued on 22 October, which amended and enhanced a number of the initial features. In a pragmatic change, the scheme will now differentiate between:
- JJS Open: support for businesses that are operating but have less demand for their services and
- JSS Closed: those who have to close or are restricted because of coronavirus measures imposed under the Tier systems
This article summarises the key features of the new scheme under the latest guidance, although details such as the dates for eligibility are likely to change once the new implementation date has been confirmed.
What is the JSS?
Under the new financial support scheme, the Government is offering to provide temporary financial contribution towards the wage costs of workers whose hours have been reduced as a result of a decline in work due to the pandemic.
The Government has stated the JSS grant is intended to continue the critical financial support available to employers while preserving “viable jobs” and avoiding large-scale redundancies.
Who can use the new scheme?
The scheme will be available to businesses that remain open.
The scheme will automatically be open to all SMEs with a UK bank account and operating PAYE schemes, including those who did not claim under the Job Retention Scheme.
Larger businesses will be assessed for eligibility. This will entail undergoing a financial test and providing evidence that the business has been adversely affected and that turnover is lower now than it was before the pandemic caused economic difficulties. Details of the test are yet to be released.
Larger businesses will also be expected to suspend making capital distributions such as dividends or share buybacks while they are using the scheme.
The guidance as yet does not define what would be classed as an SME, but generally this would be a business which meets two out of the following three: turnover of less than £25m; fewer than 250 employees; gross assets of less than £12.5m.
When does the new scheme go live?
The Job Support Scheme is set to take effect once the CJRS closes.
How does the Job Support Scheme work?
The Government’s contribution will be administered as a monthly reimbursement in arrears to the employer and the grants can only be used as reimbursement for wage costs incurred.
For an employer to claim, the employee must have been on the employer’s PAYE payroll on or before 23 September 2020 (this qualifying date is subject to change in line with the new date for implementation of the JSS).
The government contribution will be calculated using the employee’s usual (not furloughed) salary rate.
The grant does not cover pension contributions and NICs, which remain payable by the employer.
Each claim will be submitted for a given pay period. Each claim must be after the employee has been paid and that payment has been reported to HMRC through RTI.
The employee only has to work 20% of their normal hours. This is to be paid for by their employer at the employee’s normal rate of pay.
For the hours not worked, the employer will pay only 5% of the wage cost (up to £125 per month), while the Government will contribute 61.7% for the hours not worked, up to a maximum of £1,541.75.
Employees who earn £3,125 a month or less (gross) will receive at least 73% of their normal wages. Those who earn more than this will receive less. This means the employee receives 73% of their normal monthly pay for working the reduced hours.
Employers can top up payments and employees on the scheme are able to undertake training. Time spent training is to be classed as working time and counts towards the 20% threshold.
The JSS is available to businesses required by law to close, or whose services are restricted, under the ‘tiered’ lockdown measures.
Under the scheme, the Government will pay two thirds of an employee’s normal salary, up to a maximum of £2,083.33 per month. To qualify, the employee must have been employed by the business before 23 September 2020 (this qualifying date is subject to change in line with the new date for implementation of the JSS) and be unable to work for seven consecutive days.
Affected employees may also be eligible to claim additional financial support, such as Universal Credit.
What if an employee works more than a third of their hours?
Government contribution will reduce on a sliding scale the more hours an employee actually works.
This means the JSS grant amount will reduce in line with the decrease in unworked hours against which the grant can be claimed.
Will changes to the employment contract be required to use the scheme?
A short-time working arrangement should be agreed with affected employees. As is a general legal requirement, any such change to working arrangements must be agreed with the employee and notified in writing.
This agreement must be made available to HMRC on request.
How flexible can we be with working hours?
Employees will be able to come on and off the scheme in line with the demands of the business. They can also work to a different pattern of hours, subject to a minimum short-time working arrangement period of 7 days.
Will the Job Support Scheme impact the Job Retention Bonus?
Employers will remain eligible to claim the Job Retention Bonus for workers who had previously been furloughed and kept on until at least 31 January 2021.
What if redundancy becomes unavoidable?
The scheme rules make it clear that employees must not, during the period in which the employer is claiming the grant, be made redundant or be given notice of redundancy.
The employer would have to take the employee off the scheme and follow a fair and lawful redundancy process.
Will employers using the scheme be monitored?
Yes, HMRC has confirmed it will be checking the claims.
Where HMRC finds fraudulent claims or claims based on false or incorrect information, funds will either be withheld, or the employer will be required to pay back funds.
Further details awaited
Full details of how to make a claim and how larger companies will be financially assessed are yet to be released.
The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.