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JOB SUPPORT SCHEME – EVERYTHING YOU NEED TO KNOW
Following the recent lockdown announcement on 31st October 2020 and extension of the furlough scheme, please see our most recent blog
Job Support Scheme – Further Update 23rd October 2020
Further guidance has today been released by the Government in a Policy Paper.
The two schemes have been named JSS Open, and JSS Closed for those businesses who are required to close under lockdown restrictions.
There must be a written agreement between the employer and employee under both schemes. Template JSS agreements will shortly be available within the HRi Template Library, accessible to HRi members.
More guidance is expected by the end of the month.
Update 22nd October 2020
We have today heard that Rishi Sunak has made further changes to the Job Support Scheme which is due to kick in from the 1st November 2020.
This is in response to businesses in tier two areas, especially those in the hospitality sector, claiming they would be in a better position if they were in tier three areas. Their argument being, if they were in a tier 3 area and were therefore forced to close, they would receive a higher level of government support than being in a tier 2 area.
Rishi Sunak acknowledged these complaints, and has responded by making changes to the Job Support Scheme.
As outlined in our original blog below, the Job Support Scheme’s eligibility criteria specified that employees must work for at least 33% of their usual hours and for every hour not worked, the government and employer would pay 1/3rd each of the usual hourly wage.
This 33% that employees needed to be working to qualify, has now been reduced to 20%, extending the eligibility to employees who are working as little as 1 day per week.
The contribution the employer must pay for the hours the employee does not work has also been slashed to just 5% from 33%. Employers will also still be able to receive the £1,000 Job Retention Bonus.
There have been no changes made to the Job Support Scheme for those businesses that are legally required to close.
By Katy McMinn ,Co-founder of HR Independents
What next after furlough?
Many organisations with employees on furlough, who are financially impacted by COVID-19 are wondering what is happening next. The government published details of the job support scheme on 24 September 2020. The new scheme is for any employer who is experiencing reduced business due to COVID-19, regardless of whether they used the Furlough scheme previously.
The new scheme will run from 1 November to 31 April 2020 and is designed to help employers retain valuable staff that they may have less work for due to the impact of COVID-19.
A summary of the scheme
- Employer must continue to pay employees their normal contractual wage for any time worked.
- Employee must work at least 33% of their usual hours.
- Employee will be paid up to two-thirds of their usual wage for any time not worked.
- The cost will be split between the employer, the government and the employee for any hours not worked (employee will earn less).
- For every hour not worked by the employee, the government and employer will pay 1/3 each of the usual hourly wage for that employee.
- Employees contribute for hours not worked by effectively taking a 1/3 wage reduction, although they keep their job.
- The government’s pay of 1/3 of hours not worked is subject to a cap of £697.92 a month.
- Employers using the Job Support Scheme will also be able to claim the £1,000 Job Retention Bonus if they meet the eligibility criteria.
What is the criteria for eligibility?
All employers with UK PAYE schemes and bank accounts can claim the grant. The employer must have made a Real Time Information (RTI) submission to HMRC notifying payment for that employee on or before 23 September 2020.
There is no financial assessment test for Small and medium enterprises (SMEs):
Large businesses must meet a financial assessment test. This is because the scheme is only available to employers whose turnover has reduced due to COVID-19. Large employers will not be able to make capital distributions, such as dividend payments or share buybacks, whilst using the scheme.
- Your employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
- For the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.
- The scheme is flexible so employees will be able to move on and off the scheme and do not have to be working the same pattern each month
- Each short-time working arrangement must cover a minimum period of seven days.
Usual wages and top up allowance
For employees on a fixed salary this means employers would use the wages payable to the employee in their last pay period on or before the date the scheme started.
Employees who have previously been furloughed will have their underlying usual pay and hours used to calculate their usual wages, not the amount they were paid whilst on furlough. So, for employees on long term furlough their usual salary basis is likely to be the last full salary payment for the period on or before 19 March.
We do not know yet whether employers can top up employees’ wages above the two-thirds contribution to hours not worked at the employers’ expense.
Payments from government
Payments will be made monthly in arrears by the government, reimbursing the employer’s contribution. Employers must pay both class 1 employer NICs and pension contributions, which will not be reimbursed by the government.
Employers can claim online through the government website from December 2020. Claims can only be made for a pay period, after payment to the employee has actually been made and reported to HMRC via their real time information submission system.
Grants can only be used as reimbursement for wage costs actually incurred.
Fraudulent or incorrect claims
HMRC will check claims and seek repayments if a claim is found to be fraudulent or incorrect. HMRC will inform employees directly of the full details of the claim. The agreement between employer and employee must be made available to HMRC on request.
We are awaiting the full guidance outlining the detail of the job support scheme so employers should ensure they keep up to date with the latest information on the government website.
Action for HR
If an employer wishes to place an employee on this scheme, an agreement needs to be in place which HMRC could ask to see.
The agreement must be agreed and signed by the employee. Employee needs to understand the alterative if they don’t sign.
Employees cannot be made redundant or notified of redundancy whilst their employer is claiming a grant for them during that period.
HMRC has advised that further guidance will be published shortly, however, they have advised some key details already.
By Ruth Cornish – Co-founder of HR Independents