23 October 2020
On 22 October 2020, the government announced further amendments to the UK-wide Job Support Scheme (JSS), which will run for six months from 1 November 2020, immediately after the Coronavirus Job Retention Scheme (CJRS) or “furlough” scheme ends.
The JSS was first announced on 24 September 2020 and its purpose was initially to support “viable” UK employers who are operating but face lower demand due to COVID-19 (“JSS Open”). Following increasing infection rates and ‘local lockdowns’, an expansion to the JSS was announced on 9 October to support businesses whose premises are legally forced to close as a result of COVID-19 restrictions (“JSS Closed”). The amendments announced yesterday make the JSS Open more generous, and there were no changes to the JSS closed.
A lot has changed since 24 September and we now have a much awaited government policy paper setting out some detailed guidance about the JSS. However, the government has advised that further guidance is to be published at the end of October. For now, here are the key issues:
- Employees must work a minimum of 20% of their usual hours (instead of 33% under the previous terms). Employers remain responsible for paying for the hours worked and employees can do training in these working hours.
- For every hour of usual hours which is not worked, the employer will be required to pay 5% of the employee’s “reference salary” (up to a cap of £125) and the government will pay 61.67% of the reference (up to a cap of £1,541.75 per month). The employee contribution has been reduced from 33% to 5% and the government contribution increased from 33% to 61.67%.Employers who could not previously afford the 33% employer contribution may wish to now reconsider whether they can utilise the JSS Open.
- “Usual hours” for employees with fixed hours will be the greater of:
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention scheme (NB. if employees moved to part time working, this may be varied - full details will be included in forthcoming Guidance)
- “Usual hours” for employees with variable hours will be the greater of:
- the number of hours worked in the same calendar period in the tax year 2019 to 2020
- the average number of hours worked in the tax year 2019 to 2020
- the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020
- Calculations of “usual hours” should include hours paid as annual leave and statutory leave.
- “Reference salary” for employees with fixed pay will be the greater of:
- the wages payable to the employee in the last pay period ending on or before 23 September
- the wages payable to the employee in the last pay period ending on or before 19 March 2020 (i.e. before the furlough scheme began)
- “Reference salary” for employees with variable pay is the greater of:
- the wages earned in the same calendar period in the tax year 2019 to 2020
- the average wages payable in the tax year 2019 to 2020
- the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020
- The calculation of “reference salary” should include regular payments the employer is obliged to make, such as non-discretionary overtime and commission payments.
- Employers with 250 or more employees on 23 September 2020 must undertake a financial impact test to determine whether they can claim the JSS Open. This is a new eligibility criteria and details of the test can be found in the government policy paper. In short, the test is to determine whether the business has been adversely affected due to coronavirus. Turnover must have remained equal or fallen and some, or all, of their employees must be working reduced hours.
- Reduced hours arrangements must be agreed with staff, varying the employment contract if required, and there must be written agreement with staff (in contrast to a written notification per the previous government factsheet). HMRC will publish further guidance on what to include in the written agreement by the end of October.
- Working patterns can vary, and employees can come on and off the scheme, but each short time working arrangement must cover a minimum period of seven days. It appears therefore that the minimum 20% of usual hours can be worked over the month.
- Businesses will be eligible if they are required to close their premises (or restrict to delivery or collection only services or the provision of food and/or drinks outdoors) as a result of restrictions set by one or more of the four governments in the UK.
- Businesses will not be eligible if they are required to close by local public health authorities as a result of specific workplace outbreaks.
- Employees who are instructed not to work as a result of the above will receive two-thirds of their wages for time not worked, up to a limit of £2,083.33 per month. “Wages” are calculated using the same reference salary calculation noted above.
- Employees must be instructed to and cease work for a minimum of seven consecutive days, and employers must have reached written agreement with their employee. As above, we await further guidance on what should be included in the written agreement.
- Further eligibility conditions of the JSS Closed are to be published by the end of October.
Key issues applying to the JSS Open and JSS Closed
- Employers can access the JSS if they have enrolled for PAYE online and have a UK bank account (subject to the financial test above, if applicable).
- The government expects that large employers (with 250 or more employees) and any corporate groups using the scheme will not make capital distributions while using any JSS grant.
- Organisations whose staff costs are full publicly funded (even if they are not in the public sector) should not use the JSS and should continue to pay staff with the public funding.
- Employees do not have to have been furloughed previously under the CJRS to be eligible for the scheme.
- Employees must have been in employment on 23 September 2020 on the employer’s Real Time Information submission at some point between 6 April 2019 and 11:59pm on 23 September 2020.
- Employers will be able to top up employee wages above the level of minimum contributions at their own expense if they wish (in contrast to the position under previous JSS factsheets).
- Employers cannot claim for an employee who has been made redundant or is serving a contractual notice period during the claim period (in contrast to the position under the CJRS).
- Employers will be able to make a claim online from 8 December 2020 and will be reimbursed in arrears.
- The grants will not cover Class 1 employer NIC or pension contributions - these remain payable by the employer.
- Employers using the JSS will be able to claim the £1,000 Job Retention Bonus if they meet the eligibility criteria.
- HMRC will check claims and can require the employer to provide a copy of the written agreement with staff. Employers should retain a copy of the agreement for 5 years.
While we now have the government policy paper, the devil is really in the further detail and we await the government guidance due by the end of this month.
Please contact a member of the Employment Team should you require any assistance in relation to the JSS or any other employment issue.
This update contains general information only and does not constitute legal or other professional advice.
Caroline Carr, Partner: E: email@example.com / T: 0141 225 5263
Laura Salmond, Partner: E: firstname.lastname@example.org / T: 0141 225 5313
Douglas Strang, Senior Associate: E: email@example.com / T: 0141 225 5271