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.
On 9 October 2020, the Chancellor announced an expansion to the original JSS which will provide different wage cover arrangements for businesses who are legally required to close due to local (or possibly national) lockdown over the winter months. You can read more about the lockdown version of the JSS at the end of this guidance note.
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, eg 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. For more information on the Job Retention Bonus, please click here.
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.
Job Support Scheme (lockdown)
As the standard JSS includes a minimum working hours threshold, it cannot be used by any employer who has fewer working hours to offer, or those who cannot offer any work. As a response to the increase in COVID-19 cases seen in early Autumn, the Scottish Government announced, on 7 October 2020, that a large number of businesses in the hospitality industry in the “central belt” of Scotland were required to close from 9 October to 25 October 2020 to prevent further spread.
The Chancellor’s announcement of 9 October 2020 can be taken as confirmation that business closures are to be expected across the UK.
The Chancellor confirmed that the JSS will be expanded to offer wage assistance to those businesses who are required, under lockdown procedures, to temporarily close their business. It is anticipated that the hospitality sector (pubs, bars, restaurants) will be the most heavily affected sector. Some of these businesses, for example, nightclubs, have been under enforced closure since March 2020.
The expansion will offer assistance to businesses who cannot offer any work to their employees but, from November 2020, are unable to use the Job Retention Scheme because of its closure and are also unable to use the standard Job Support Scheme due to their inability to meet the minimum working hours threshold.
Businesses who are not legally required to close will not be able to use the JSS expansion; they will need to use the standard JSS which requires a third of working hours to be performed.
From 1 November 2020, businesses across the UK who are legally required to close as part of a lockdown will receive wage assistance through the expanded JSS for employees who are off work for a minimum of seven calendar days.
Any business legally required to close due to lockdown before the end of October 2020 can still use the Job Retention Scheme to either fully furlough or flexibly furlough employees, subject to its qualifying criteria.
Full details of the expansion are awaited, but here is what we know so far:
The ‘lockdown JSS’ will run for 6 months, however, a review has been planned in for January 2021.
The Government will pay two thirds of each employees’ salary (or 67%), up to a maximum of £2,100 a month.
Employers will not be required to contribute towards wages but will have to cover NICS and pension contributions.
To be eligible, employees must be employed by the employer making the claim and a RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 23 September 2020. Those who were employed before this date but had not been paid by then will be excluded.
Employers will make wage claims via a HMRC online portal which will be available from early December.
Payments to employers will be made monthly in arrears.
The Government confirmed that more details will be published in due course.
