Break Down Of The Job Support Scheme
Released On 28th Oct 2020
What is the Job Support Scheme?
On 31st October 2020 the Governments Furlough Scheme will come to an end. Instead it will be replaced by the Job Support Scheme which is designed to protect viable jobs in Company’s who are facing lower demand over the winter months, to help keep their employees in employment and to reduce the amount of possible redundancies due to COVID-19.
The Scheme will run from the 1st November 2020 until the 30th April 2021, with a review after the first three months of operation.
The Chancellor has recently announced increased support for employers under the new Job Support Scheme.
How the New Improved Job Support Scheme will work
Employers will be expected to continue to pay employees for their time worked, however the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction), resulting in the employee being kept in employment.
The New Improved JSS envisages employees working reduced hours, except where the employers’ business is required to close under local or national restrictions. For businesses which can remain open and are able to provide work, employees will be required to work for at least 20% of their usual working hours, at their normal contracted wage rate for those hours. Employees will not be asked to work for any less than 20% of their usual working hours, although it may be more than, depending on their role and business conditions at the time.
Who is Eligible?
- All employers with a UK bank account and UK PAYE schemes can claim the grant
- The employer does not have to have used the CJRS to be eligible to claim
- Large businesses will have to meet a financial assessment test to show turnover has stayed level or is lower due to COVID-19. There will be no financial assessment test for Small and Medium Enterprises (SMEs)
- The expectation is that large employers (with over 250 employees) using the JSS will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. Further details will be set out in guidance shortly
- The Government plans to publish a list of all employers who use the JSS, so that employees and members of the public can report fraud
- Employees must be on an employer’s PAYE payroll on or before the 23rd September 2020.
- To support viable jobs, the employee must work at least 20% of their usual hours.
- Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each week/month, but each short time working arrangement must cover a minimum period of seven days
What does the grant cover?
- Employers will be required to pay for the hours worked as usual, plus a further 5% of wages for hours not worked up to a cap of £125 per employee per month.
- The Government will contribute up to a further 61.67% of wages for the hours not worked, up to a maximum of £1,541.75 per employee per month.
- For example, an employee who normally earns £1,100 per month who works 20% of their hours under the JSS would be paid £220 by their employer for hours worked. For hours not worked, the employer would pay £44 and the Government would fund £543, so that the employee receives £807 in total. In percentage terms, the employer pays 24% of wages, while the Government contributes 49% so the employee receives 73% of their normal wages.
- The Government contribution will not cover employer national insurance or pension contributions and employers will remain liable for these on the whole amount payable to employees
- Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. The expectation is that employers cannot top up their employees’ wages for hours not worked at their own expense
What does it mean to be on reduced hours?
- The employee must be working at least 20% of their usual hours
- Employers will need to agree the temporary working arrangement for shorter hours with employees in writing
- For the time worked, employees must be paid their normal contracted wage for those hours
- The employee’s usual hourly rate would be calculated using similar methods as under the furlough scheme
- Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee
How can I claim?
- The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid monthly
- Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return
There is enhanced Government support under the JSS for employers who are legally required to close their premises as part of local or national restrictions. Where employers are required to close, the Government will contribute two thirds of the normal wages for any employees unable to work due to the closure, up to £2,100 per employee per month. Employees must be off work for a minimum of seven consecutive days to be eligible. In these circumstances, employers will not be required to contribute towards such wages but will be required to cover employer NICs and employer pension contributions on the amounts paid to employees.