Job Support Scheme: what are the updates?
The Coronavirus Job Retention Scheme (CJRS) comes to an end on 31 October 2020. In a statement released on 24 September 2020, Chancellor Rishi Sunak unveiled new measures intended to help employers pay employee wages and keep employees in work, as far as is reasonably practicable, once the CJRS closes.
Deriving from the Government’s Winter Economy Plan, the Job Support Scheme (JSS), which will replace the CJRS, is designed to protect viable jobs in businesses facing lower demand throughout the winter months due to the impact of Covid-19. Its intention is to keep employees attached to the workforce where possible and to avoid a wave of redundancies and job losses when the CJRS ceases.
The JSS has now been updated and we summarise the changes in italic below.
JSS (Open): what are the updates?
- Duration: The JSS will replace the CJRS from 1 November 2020 and will be in place for a period of six months, until April 2021.
Update: The updated guidance provides that the JSS will be in place until 30 April 2021. The terms of the scheme will be reviewed by the Government in January 2021.
- Employer Eligibility: All employers with a UK bank account and UK PAYE scheme are eligible. Neither the employer nor the employee needs to have utilised the CJRS previously. Larger businesses will have to meet a financial assessment, ensuring the scheme is only available to those whose turnover has decreased due to the impact of Covid-19. Small and medium enterprises (SMEs) will not be subject to any financial assessments. We have yet to learn how an SME will be defined.
- Employee Eligibility: Employers can only claim for employees who were on their PAYE payroll on or before 23 September 2020, meaning that a Real Time Information (RTI) submission notifying payment to that employee must have been made to HMRC on or before 23 September 2020.
Update: The updated guidance confirms that employers can only claim for employees who were on the PAYE payroll between 6 April 2019 and 23 September 2020, meaning that an RTI submission notifying payment to that employee must have been made to HMRC between 6 April 2019 and 11.59 pm on 23 September 2020.
- Hours Worked: For the first three months of the JSS, employees must be working at least 33% of their usual hours and the employer will be responsible for the normal contracted wages for the hours worked. Thereafter, the Government will decide whether to increase the minimum hours threshold. Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month (although each short-time working arrangement must cover a minimum period of seven days).
Update: The updated guidance reduces employee minimum working hours from 33% to 20%. This means that in order to be eligible for the scheme, employees must be working at least 20% of their usual hours and the employer will continue to be responsible for the normal contracted wages for any hours worked.
- Hours not Worked: In respect of the hours not worked, the employee will be paid two thirds of their usual wages, subject to the Government cap. This will be equally split between the Government, the employer and the employee (through a wage reduction).
Update: The updated guidance further reduces the employer contributions to 5%. This means that employers must contribute 5% of wages for non-working hours (up to a cap of £125.00) however, they may pay more than this if they wish. The Government will then pay the remaining 62% of wages for hours not worked, as set out below:
For example: if an employee works 20% of their normal working hours, the employer contributes 5% and the Government contributes 61.67%, the employee would be agreeing to receive a wage reduction for the final share which equates to 13%.
- Contributions: The Government’s contribution will be capped at £697.92 per month. Government and employer contributions will reduce on a sliding scale the more hours an employee actually works. Employees using the scheme will receive at least 77% of their pay, where the Government contribution has not been capped.
Update: The updated guidance increases the Government’s contribution cap, in line with the above changes, to £1,541.75 per month. This will ensure that employees continue to receive at least 73% of their wages, where they earn £3,125 a month or less.
- Payments: Payments made under the scheme will be made in arrears. The JSS will not cover any National Insurance Contributions (NICs) or pension payments, meaning employers will remain responsible for those liabilities.
Update: The updated guidance makes it crystal clear that the employer will be responsible for any NIC or pension payments.
- Calculating Hours: The approach to calculating an employee’s usual wages is expected to be similar to that used by the CJRS. Employees previously furloughed will have their contractual pay and/or hours used to calculate their usual wages, not the amount they were paid whilst on furlough.
- How to Claim: The JSS will open on 1 November 2020 and employers will be able to make a claim online via the Government’s website gov.uk from December 2020. Payments made under the scheme will only be paid on a monthly basis. Claims can only be submitted in respect of a previous pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI submission.
Update: The updated guidance states that employers will be able to make their first claim on 8 December 2020, covering wages paid in November 2020. Thereafter, subsequent months will follow the same pattern with the final claims for April 2021 being made in May 2021. Further guidance on how to claim is expected towards the end of October 2020. Employers must have paid the full amount claimed for an employee’s wages to the employee prior to submitting a claim. More details on what can and cannot be claimed can be found here. HMRC will check claims and payments may be withheld or clawed back if they are found to be fraudulent or based on false information.
- Short-Time Working Arrangements: Employers must agree, in writing, any short-time working arrangements under the JSS with their employees in advance. Such agreement must be retained and made available to HMRC on request.
Update: The updated guidance confirms that all written agreements between the employer and employee must cover at least seven consecutive days.
- Redundancy: Importantly, in contrast to the CJRS, an employee cannot be made redundant or put on notice of redundancy during any period in respect of which an employer is claiming a grant under the JSS for them. It is not yet clear whether that applies for the whole six months of the JSS or a particular pay period, but further guidance is expected.
Update: The updated guidance makes it crystal clear that employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
- Job Retention Bonus: Employers using the JSS can claim the Job Retention Bonus if eligible.
JSS (Closed): what are the updates?
The guidance provides that employers are eligible to claim JSS Closed if their business premises have been legally required to close as a direct result of Covid-19 restrictions. This includes premises restricted to delivery or collection only services and those restricted to provision of food and/or drink outdoors.
Business premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for this scheme.
Further details on both schemes can be found here.