Job Support Scheme – advice for employers

Job support scheme – advice for employers

On 22 October 2020, the Chancellor announced key amendments to the Job Support Scheme.

Here, we take a look at support for ‘Open’ premises.

What has been announced?

The furlough scheme will end on 31 October 2020 as planned, however the new JSS will take effect from 1 November 2020 for a period of 6 months. There is a shift in focus from keeping jobs open to supporting people who are working. The aim of the JSS is to protect ‘viable’ jobs in businesses facing lower demand over the winter months as a result of coronavirus.

Who is eligible?

Employers

• Employers must have a UK bank account and UK PAYE schemes.
• All small and medium businesses (SMEs) are eligible however larger business will have to meet a financial assessment test which demonstrates that their turnover is lower now than ‘before experiencing difficulties from Covid- 19’.
• Larger employers (>250 employees) are expected to refrain from making capital distributions, such as divided payments or share buybacks, whilst accessing the grant. More Information on this is expected in the Government’s official guidance.

Employees

• Employees must be on an employer’s PAYE payroll on or before 23 September 2020. As such, a Real Time Information (RTI) submission. must have been made on or before 23 September
• The employee must work at least 20% of their ‘usual’ hours for the first 3 months. After 3 months, the Government will review the minimum hours threshold with a view to increasing this. An employee working only one day per week will qualify.
• Employees will be able to rotate on and off the JSS. There is no requirement to follow the same pattern each month but each short-time working arrangement must cover a minimum of seven days.

What does the JSS grant cover?

• For every hour not worked by the employee, the Government and the employer will pay up to two thirds of the ‘usual hourly wage’ of that employee.
• The maximum salary that can be covered under the JSS Is £3125 per month.
• The employer contribution is 5% of the unworked hours. The Government contribution is 67% of the unworked hours.
• The employer contribution will be capped at £125 per month.
• The Government contribution will be capped at £1541.75 per month and will be made in arrears, meaning the employer will continue to pay the employee directly and claim back the government grant as with the CJRS. Employers will be able to claim online from December 2020.
• ‘Usual wages’ should be calculated in a similar way to the CJRS but more details are expected to be released in official guidance shortly – we will update you on this.
• Employees who have previously been furloughed will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.

What is excluded?

The grant will not cover Class 1 employer NICs or pension contributions; these remain payable by the employer. The employer must pay NICs and pension contributions on reduced wages and ‘top-up’ wages.

What about redundancies?

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the JSS grant for that employee.

How do employers implement short-time working arrangements?

• Employers must agree new short-time working arrangements with employees, make any changes to employment contracts by agreement, and notify the employee in writing.
• This agreement must be made available to HMRC on request and we expect this will be required to be kept on file in the same way as variations must be for the CJRS.

HMRC checks

Following wide reporting of abuse to the CJRS, HMRC has announced that it will check claims under the JSS and payments may be withheld or claimed back if a claim is found to be fraudulent or based on incorrect information.

Next steps for employers

• Employers must first pay to employees the full amount of wages intended to be covered under the JSS. This Is likely to cause businesses significant cash-flow Issues and could force them to borrow funds to pay wages until the grant can be reclaimed.
• Review any plans for redundancies and consider how this will be impacted by the improved JSS – it may be that redundancies can now be avoided, assuming the employer can afford its payment obligations under the JSS.
• Review and consider any improvements to their processes for recording how many hours people work. If they take advantage of the JSS, and HMRC do check-up on them, it will be beneficial to have a robust recording system and reliable records in place.
• Consider how to implement the short-time working arrangements, should they want to take advantage of the JSS. Is your existing short-time working clause sufficient to cover the JSS? If not, this may involve contractual changes.
• Review your contractual deductions clauses. If HMRC does not award your grant, you may need to recover over-payments In wages for hours not worked but that were paid for In expectation that the JSS would apply.

Example

• Beth normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).
• Her employer pays Beth £140 for the days she works.
• For the time she is not working (3 days or 60%, worth £210), she will also earn 2/3 of her normal pay.
• Her employer will contribute £10.5 per week and HMRC will contribute £129.50 per week.
• Bringing Beth’s total weekly earnings to £280 (subject to employee PAYE deductions and pension contributions).
• The employer will pay NICs and pension contributions on £280 per week.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.