Updated Job Support Scheme Guidance
Following Rishi Sunak’s announcement last Thursday on how Government is providing support to help employers retain their employees through the Job Support Scheme (JSS) we want to update you with our understanding of the scheme.
There are 2 Job Support Schemes, one for businesses that are operating but facing decreased demands called JSS Open and one for businesses that are legally required to close their premises as a direct result of the coronavirus restrictions called JSS Closed.
Both will apply from 1 November 2020 to 30 April 2021 but will be reviewed in January 2021. Government has also stated that further guidance will be made available at the end of October.
Employers will be able to claim monthly in arrears from 8 December 2020 and payments will be made after the claim has been approved.
To be eligible for the schemes, employers must have a UK bank account and a PAYE scheme registered on or before 23 September 2020. Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme to be eligible for the JSS.
Eligible employers will be able to claim the JSS grant for employees who were on their PAYE payroll, and an RTI Full Payment Submission in respect of that employee made to HMRC between 6 April 2019 and 11.59pm 23 September 2020. However, employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period. Employees can be on any type of contract including zero hours or temporary contracts.
Employers will be able to top up employee wages above the level of contribution from Government at their own expense if they wish.
Employers can claim both the JSS Open and JSS Closed grant at the same time for different employees, but they cannot claim an employee under both schemes at the same time.
Large business (those with 250 employees or more on 23 September 2020) must also complete a Financial Impact Test to evidence that their income has been impacted due to Coronavirus. Employers will only qualify if their turnover has remained equal or has decreased when compared to the previous year. This will be done by comparing the total sales figure from the VAT Return which is due to be filed and paid between 31 August 2020 and 7 November 2020 to the total sales figure from the same quarter last year. This test will only need completing once before the first claim is submitted. It is expected that to be eligible large businesses will not pay dividends or make capital distributions whilst accessing the grant.
Under JSS Open employees will need to work a minimum of 20% of their usual hours. Employers will continue to pay employees as normal for the hours worked. For the usual hours not worked, employees will receive 66.67% of their normal pay. This will be made up of contributions from the employer (5% of the reference salary for the hours not worked up to a maximum of £125 per month) and Government (61.67% of the reference salary for the hours not worked up to a maximum of £1,541.75 per month). This means that employees who earn £3,125 a month or less will receive at least 73% of their usual earnings.
Depending on the hours the employee works, on the basis that the employee’s reference salary is £3,125 per month or less, the percentages of the employee earnings and employer cost of their normal salary are as follows
|Hours Employee Working||20%||33%||40%||50%||60%||70%||80%|
|Hours Employee Not Working||80%||67%||60%||50%||40%||30%||20%|
|Employee Earnings (%of normal wages)||73.3%||77.7%||80%||83.3%||86.7%||90%||93.3%|
|Government Grant (% of normal wages)||49.3%||41.3%||37%||30.8%||24.7%||18.5%||12.3%|
|Employer Cost (% of normal wages||24%||36.35%||43%||52.5%||62%||71.5%||81%|
Under JSS Closed employees who cannot work, will receive two thirds of their normal pay paid by their employer and fully funded by Government to a maximum of £2,083.33.
Under both schemes employers will have to pay the cost of any Employer National Insurance contributions and pension contributions as these are not covered by the grant.
Employers must also reach written agreement with their employees (or reach written collective agreement with a trade union where the relevant terms are determined by collective agreement) that they have been offered a temporary working agreement. The agreement must be available for view by HMRC on request. This temporary working agreement must cover at least seven consecutive days.
Claims should commence from the later of the date that the employee starts working reduced hours or the date when the reduced working hours is confirmed in writing.
Claims are subject to a maximum reference salary of £3,125 per calendar month. The reference salary includes wages, non-discretionary payments for hours worked, including overtime, non-discretionary fees and commission payments.
For employees who are paid a fixed salary, the Reference Salary is the greater of:
- the wages payable to the employee in the last pay period ending on or before 23 September 2020
- the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme
For employees whose pay is variable the Reference Salary 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
There are different calculations for working out an employee’s usual hours
For employees contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, usual hours are calculated based upon 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
For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the higher 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
This should include hours paid as annual leave and statutory leave.
More detailed information is available on the Government website https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme#eligibility-criteria
Government will publish more detailed guidance on how to claim by the end of October and we will keep you updated on any changes in respect of this scheme.
As we have done with furlough claims under the Coronavirus Job Retention Scheme, should you require, we will be able to assist and carry out the calculations necessary for payroll and also make claims for the JSS on your behalf.
If you require any assistance, please get in touch with either James Andrews or Gordon Gruppetta on 01132574506.