Last week, the Government introduced the Job Support Scheme (‘JSS’). The scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19. The intention is to help protect jobs by helping the employer through wage support. It picks up where the furlough scheme ends on 31 October 2020, although there is no need for the employee or the employer to have benefitted from the furlough scheme in order to take part.
1) What is the Job Support Scheme?
- The Job Support Scheme commences on 1 November 2020 and will run for 6 months to 30 April 2021.
- The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third (in addition to the amount paid for the hours actually worked), to ensure that employees will earn a minimum of 77% of their normal wages. The maximum amount the Government will pay is capped at £697.92 per month. For example:
If Dave normally worked 100 hours then he must actually work 33 hours in the pay period to qualify under this scheme. He has therefore ‘not worked’ for 67 hours. Of this 67 hours the government will pay wages for 22 hours as this is 1/3 of 67 hours. The employer must also pay for 22 hours not worked to match the government. In total, to allow for rounding, the employee will be paid for 78 hours. The intention is that the employer does not top up the wages to 100%.
- Employers using the JSS will be able to claim the Job Retention Bonus if they meet the eligibility criteria.
- An employee cannot be made redundant during the period for which the employer claims the grant.
- The grants will be paid in arrears and a claim can be made once the relevant RTI submission has been submitted.
- The grant will not cover Class 1 NICs or pension contributions – these will remain payable by the employer.
- The payments received will be taxable if they are referenced to the business. Section 106 and Schedule 16 of Finance Act 2020 provides for the taxation of coronavirus support payments.
- Employers will have to agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
2) Who is eligible for the Job Support Scheme?
- For the first three months of the scheme, the employee must work at least 33% of their normal hours. The Government will review the position thereafter.
- Further information will be published shortly as to the definition of ‘normal’ hours. This will follow a similar definition as that used for the furlough scheme.
- All employers with a UK bank account and UK PAYE schemes are eligible for the grant and there is no requirement that they previously participated in the furlough scheme. Large businesses will have to meet a financial assessment test, showing that their turnover is lower as a result of Covid-19. It is expected that large businesses, as part of the financial assessment test, will need to show that they are not paying dividends or undertaking a buyback of shares. We expect further detail regarding this shortly. There will be no financial assessment test for small and medium sized businesses.
- Employees must have been on a payroll scheme on or before 23 September 2020 and a RTI submission must have been made to HMRC showing a payment as having been made to that employee on or before 23 September, so any new starters will not be eligible.