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Coronavirus
On 22 October, the UK government announced significant changes to the Job Support Scheme which comes into effect on 1st November, replacing the Job Retention Scheme (also known as the furlough scheme). It has also set out more details about the scheme and how businesses qualify for it.
Bowing to pressure from the business community, the government has announced a number of extra ways in which it intends to provide financial support for businesses over the winter months. The announcement covers changes to the Job Support Scheme, self-employed grants and business grants. This update focusses on the Job Support Scheme and the government’s new Job Support Scheme Policy Paper of 22 October 2020 which gives more detail on the scheme.
There are two distinct parts to the Job Support Scheme:
Both schemes will come into effect on 1 November 2020.
The key changes to the JSS Open announced by the government on 22 October 2020 are as follows:
|
JRS pre 1 July 2020 |
JSS Open |
JSS Closed |
Key condition |
Not permitted to work |
Must work 20% normal hours |
Business is legally forced to close by government |
Pay employee receives (per month) |
80% of pay (capped at £2,500) |
At least 73% of pay |
66.6% of pay (capped at £2,083.33) |
Government contribution |
80% of pay (capped at £2,500) plus pension and Employer NICs |
49% of pay (capped at £1,541.75) |
66.6% of pay (capped at £2,083.33) |
Employer contribution |
None unless employer chose to top up pay |
|
Employer NICs and pension on pay employee receives |
To qualify for either JJS Open or JJS Closed, employees must be:
The JJS Open and JSS Closed are open to:
The intention is that employees will be able to move on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.
Employers cannot claim under both schemes in respect of a single employee for the same day.
Although the policy paper contains no significant changes to JSS Closed, there are a few additional clarifications on eligibility for the JSS Closed that are worth mentioning here:
This is not a complete list of all the conditions for eligibility for JSS Closed and further requirements and guidance are expected to be published by the end of October.
In addition to the general eligibility requirements applicable to both schemes (see above), there are some key additional criteria which need to be met in order to claim under JSS Open:
Conditions on claiming
Use of the JSS grant - grant monies can only be used to reimburse sums already paid to employees.
Redundancy - employees cannot be made redundant or put on notice of redundancy during the period for which their employer is claiming a grant for them under the scheme.
Shareholder distributions - the government expects that large employers (250 or more employees) and their corporate groups using the scheme will not make capital distributions whilst claiming the Job Support Scheme grant. This includes:
The Policy Paper says that the government does not plan to make this expectation a contractual or legal condition of the scheme, but encourages business to reflect on their responsibilities. It also states that taxpayers should be able to rely on public money only being claimed where it is clearly needed.
Employee taxes and pensions – as noted above, the JSS grant will not cover NICs or pension contributions. These contributions remain payable by the employer.
Employers must deduct and pay to HMRC income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.
Employers must also pay to HMRC any employer NICs due on the full amount that that is paid to the employee, including any amounts subsequently met by a scheme grant.
Employers and employees must also still pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped saving into their pension.
Student loans and Apprenticeship Levy - if applicable, Student Loan deductions and the Apprenticeship Levy must also still be paid.
Salary sacrifice arrangements - employers cannot enter into any commitment or transaction with the employee which would reduce wages below the amount claimed (for example a salary sacrifice scheme). This includes any administration charge, fees or other costs in connection with the employment. Where an employee had authorised their employer to make deductions from their net salary, these deductions can continue while the employee is working reduced hours provided that these deductions are not administration charges, fees or other costs in connection with the employment (for example, pension contributions and charitable giving).
Interaction with other types of support
Job Retention Bonus - employers claiming under the JSS can still claim under the Job Retention Bonus in respect of the same employee if they are eligible.
Job Retention Scheme - the policy paper explains how employers should deal with JSS claims which overlap with Job Retention Scheme claims.
How to claim
Employers will be able to make their first claim from 8 December 2020. Claims are made online through Gov.uk. The grant will be paid on a monthly basis in arrears.
The Policy Paper sets out more details on how to calculate the reference salary and the employee’s usual hours whether fixed or variable (this will follow a similar methodology as for the furlough scheme). Usual pay for employees who have previously been furloughed will be based on their underlying usual pay and/or hours, not the amount they were paid whilst on furlough. Further details of calculations employers need to do to work out their claim will be available in guidance due to be published at the end of October 2020.
When does the scheme end?
The scheme will run for six months until 30 April 2021 but the government will review the terms of the scheme in January 2021.
Fraudulent claims
HMRC will publish the names of employers who use the scheme. Employees will be able to check if their employee has made a claim relating to them via their Personal Tax Account (sign up on GOV.UK).
The full amount of any grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount over-claimed may be applied where appropriate. HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect Job Support Scheme grant claim.
Employers will welcome these changes. Whilst the JSS remains a substantially less generous support scheme than the Job Retention Scheme, the changes announced do increase substantially the government’s contribution per employee claimed for under the scheme. When JSS Open was first announced in September, the maximum the government would pay was £697.92 per month per employee. This has now been increased to £1,541.75 per month per employee. Despite this increase, the cap is still relatively low when compared to the JRS where the cap was £2,500 per month until the end of August 2020.
The reduction in the required number of working hours from 33 % to 20% in JSS Open should also expand the range of employees which employers will be able to select to benefit from the scheme.
Lower paid employees are better off under JSS Open than under JSS Closed (see the table above) but this is to be expected considering they are required to work for at least 20% of their normal hours. It is notable that employees under both schemes can do training during non-working hours but, like the JRS, they must be paid at least National Minimum Wage rates for doing so. Significantly, training can also be done during working hours under JSS Open and can count towards the minimum 20% working hours. This will help employers retrain employees where there is little work for them to do in the short term.
The JSS remains restricted to employees on the payroll between 6 April 2019 and 23 September 2020. The fact that it’s not available to new recruits (except those who left after 23 September and were then rehired by the same employer) means that it won’t help those employers who may be hesitant to take on new staff in this climate.
We now await further guidance which the government has promised at the end of October 2020. We understand that this will include more guidance on eligibility requirements; what to include in the written agreement; the claim process and employee eligibility for parents entitled to statutory parental leave and pay.
For more details on the Job Support Scheme, please see:
End