Under the new Job Support Scheme (JSS), 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 JJS replaces the Coronavirus Job Retention Scheme, which is due to end on 31 October 2020. 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.
How does the Job Support Scheme work?
Grants are only to 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.
The employee must work at least one third 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 is to pay one third of the wage cost, while the Government will contribute a further third, meaning the employee receives two thirds of their full pay.
The government contribution will be calculated using the employee’s usual (not furloughed) salary rate and capped at £697.92 per month.
Given the maximum hours an employee will not work is 67 per cent, the maximum government contribution will therefore be 22 per cent -making it less generous that the CJRS.
Employees are to receive 77% of their gross salary for a third of their normal hours.
The grant does not cover pension contributions and NICs. These 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 government’s contribution will be administered as a monthly reimbursement in arrears to the employer.
The government has said it will review the threshold of a third of normal working hours after three months.
Who can use the JSS?
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, however, 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.
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.
Can employers top up their contribution?
No, in contrast to the CJRS rules, the government is clear that employers cannot use the JSS grant and top up their employees’ wages above the two-thirds contribution to hours not worked.
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.
When does the new scheme go live?
The Job Support Scheme is set to take effect from 1 November 2020 for six months. It is scheduled to end 30 April 2021.
The claims portal on the government website is set to open in December 2020.
Further details awaited
Full details of the new scheme are yet to be announced, including practical information such as how to make a claim and how larger companies will be financially assessed.
For advice on the new Job Support Scheme, and to consider all of your options to adapt your workforce and employment arrangements, speak to our employment law experts.
Last updated: 25 September 2020