Job Support Scheme – All you need to know

On 24 September 2020, Chancellor Rishi Sunak announced a replacement to the Job Retention Scheme – the Job Support Scheme. Below are some key facts surrounding what is currently known about this scheme.

What is the Job Support Scheme? 

On 24 September 2020, the Chancellor, Rishi Sunak, announced his Winter Economy Plan designed to protect jobs and support businesses over the coming months. As part of the Plan, the Chancellor announced the Job Support Scheme (JSS) which will replace the Job Retention Scheme (JRS).

The Job Retention Scheme has been in place since March 2020 to provide wage assistance to employers who were unable to provide work to their employees because of the impact of COVID-19, and to avoid redundancies. Employers could claim up to 80% of an employee’s wages if the employee was unable to work at all, or if they were able to work only a portion of their normal working hours.

The JRS will end on 31 October 2020 and the JSS will begin on 1 November 2020. Although the JSS will still provide some wage cover to help employers, its aim is to help employers who can support employees doing some work but need more time to recover. This highlights the main difference to the JRS; the JSS will not provide wage assistance for an employee who is doing no work at all.

Which employers can use the JSS?

Employers of any size with a UK bank account and UK PAYE schemes will be able to use the JSS but large businesses will have to meet a financial assessment test to show that their turnover is lower now than before experiencing difficulties from COVID-19. The Government expects that large businesses using the JSS will not be making capital distributions, for example dividend payments or share buybacks, whilst accessing the JSS grant.

The Scheme is open to employers who have not previously used the Job Retention Scheme to furlough employees before, as well as those who have. An employee being placed into the JSS does not need to have been furloughed before.

The Chancellor has confirmed that employers using the JSS can still claim the Job Retention Bonus, which will provide employers with £1000 for each furloughed employee they continue to employ until the end of January 2021 who also meets other criteria.

Which employees can be placed on the JSS? 

An employee to be entered into the JSS must have been on the employer’s PAYE payroll on or before 23 September 2020 which means that a Real Time Information (RTI) submission notifying payment to the employee to HMRC must have been made on or before 23 September 2020.

The Scheme is intended to protect ‘viable’ jobs in businesses who are facing lower demand over the winter months due to COVID-19. The JSS will only support those who are working fewer hours than normal; not those who are working no hours.

A key criterion to gaining access to the JSS is a minimum level of working hours: for the first three months of the JSS, employees must work for at least one third (33%) of their normal working hours. This minimum threshold will be reviewed by the Government at the three month point.

Reduced hours working arrangements will need to be agreed with employees and notified to them in writing. HMRC may ask for sight of the agreement. In a departure from the JRS, employees cannot be given notice of redundancy or made redundant during the period which the employer is claiming from the JSS for that employee.

What are the wage arrangements for an employee on the scheme? 

An employee’s wages, when on the JSS, will be funded partly by the employer and partly by the Government.

Employers need to pay employees for the hours they work, which must be at least one third of their normal working hours. The employer must also pay the employee for one third of the amount of ‘lost hours’ – ie the hours the employee would normally work, but is not working.

The Government will provide pay for one third of the amount of lost hours up to a maximum cap of £697.92 per month. The employer’s contribution of one third of pay for hours not worked is not subject to a cap. This means that all employees on the JSS will continue to earn at least 77% of their normal wages, where the Government contribution has not been capped.

Determining what an employee’s normal wages/hours are will be done in a similar way to that required under the Job Retention Scheme and the Government will provide further details on this. Normal wages/hours for employees who have been furloughed will be their underlying wages and hours, rather than those which applied during furlough.

The JSS will not cover employer National Insurance contributions or pension contributions; employers will remain liable for these.

Example 1

An employee normally works 5 days a week and earns £350 per week. Under the JSS, they work 40% of normal working hours (2 days a week). The percentage of hours lost is 60% (worth £210). The employer pays £140 for hours worked, and a further £70 (one third of hours lost). The Government will pay £70 (one third of hours lost). The employee receives £280 in total per week.

Example 2

An employee normally works 5 days a week and earns £600 per week. Under the JSS, they work 50% of normal working hours (2.5 days a week). The percentage of hours lost is 50% (worth £300). The employer pays £300 for hours worked, and a further £100 (one third of hours lost). The Government will pay £100 (one third of hours lost). The employee receives £500 in total per week.

The Government expects that employers cannot top up employees’ wages above the JSS contribution at their own expense.

Once an employee is in the JSS, do they have to stay in it?

No. Government guidance confirms that employees can cycle on and off the scheme. There is also no requirement for the employee, once in the JSS, to work the same number of hours each month (provided any changes do not fall below the minimum working hours requirement).

However, each reduced hours working arrangement must last for at least seven days.

How will I receive the JSS funds?

Guidance confirms that JSS grants will be paid in arrears to reimburse the employer for the Government’s contribution.

Claims can only be submitted in respect of a wage costs actually incurred in given pay period after payment to the employee has been made and that payment has been reported to HMRC via an RTI submission.

Claims can be made online from December 2020 and reimbursement will be made on a monthly basis.

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