On 31 October, the UK Government announced new lockdown measures which will take effect across the whole of England between 5 November and 2 December. As a result of these new measures, the Job Support Scheme, which was due to start on 1 November, has been suspended. Instead, the Coronavirus Job Retention Scheme (CJRS), which was due to end on 31 October, will continue for at least another month.
Although no lockdown measures have been announced for Scotland, we anticipate that the suspension of the JSS and the extension of the CJRS will also apply in Scotland. Further guidance is expected from both the UK and Scottish Governments imminently and we will update this article as soon as that guidance is available. In the meantime, our article on the CJRS is available here.
In this insight, we’ve answered the key questions you may have following the UK Government’s announcement of the new Job Support Scheme (JSS).
This new scheme is part of the ‘Winter Economy Plan’, to help support jobs and the economy over the coming months as many organisations, facing the end of the Furlough scheme, are looking to adapt their workforce. Announced by Chancellor of the Exchequer Rishi Sunak on 24th September 2020, this new scheme is designed to help employers who continue to face difficulties due to the Covid-19 pandemic, especially small to medium sized businesses (SMEs).
We’ll continue to update this page as further developments are announced.
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What you need to know about the JSS
In the latest guidance published on 22 October 2020, the Government has significantly expanded the JSS, reducing the amount of hours which employees will be required to work, increasing the Government contribution and providing support for businesses which are required to close. There are now two aspects to the Scheme:
- JSS Open
- JSS Closed
This is for employers who can operate safely but are facing decreased demand. It gives employers the option of keeping their employees in a job, on shorter hours, rather than making them redundant. In terms of JSS Open:
- The employee will have to work a minimum of 20% of their usual hours and the employer will pay them as normal for the hours worked.
- The employee will then receive 66.67% of their normal pay for the hours not worked – the employer will pay 5% of the employee’s salary for the hours not worked, up to a maximum of £125 per month, and the Government will pay the remaining 61.67%, up to a maximum of £1, 541.75 per month.
- The employer can, at its discretion, pay more than a 5% contribution to hours not worked.
Conditions relating to JSS Open
Who can claim JSS Open?
Employers can claim JSS Open where they meet the above criteria and:
- Some or all of their employees are working reduced hours, where each employee is working at least 20% of their usual hours.
- This arrangement has been recorded in a written agreement, available for viewing by HMRC if requested.
- For employers with 250 employees or more, as at 23 September 2020, a Financial Impact Test has to been taken, demonstrating that the employer’s turnover has remained equal or has fallen as a result of the coronavirus pandemic. (Employers with less than 250 employees as at 23 September 2020 will not be required to take the Financial Impact Test).
What is the Financial Impact Test for JSS Open?
- The test applies to all employers with 250 employees or more, except for UK registered charities which are automatically eligible regardless of how many employees they have.
- Where the employer submits quarterly VAT returns, they should compare the total sales figure on their VAT return, due to be filed between 31 August 2020 and 7 November 2020, with the total sales figure for the same quarter in 2019.
- Where the employer submits monthly VAT returns, they should compared the three consecutive months which are due to be filed and paid by 7 November 2020 with the same period in 2019.
- Where the employer files VAT returns less frequently, they should compare the three consecutive months which are due to be filed and paid by 7 November 2020 with the same period in 2019, but will need to have submitted a VAT return between 31 August 2020 and 7 November 2020 to be eligible.
The Government will publish guidance for those who are not VAT registered later in October.
How is an employee’s salary calculated for JSS Open?
- For the purposes of JSS Open, the employee’s reference salary includes all payments which the employer is obliged to make. This includes regular wages and all non-discretionary payments, including overtime and commission payments.
- The calculations must not include any payments which are made at the discretion of the employer or a client, where there is no contractual obligation on the employer to pay. This includes tips, discretionary bonuses and commission payments and non-monetary benefits like benefits in kind and salary sacrifice schemes.
- Where an employee has a fixed salary, their reference salary is the greater of:
- The wages payable to the employee in the last pay period ending on or before 23 September 2020; or
- The wages payable to the employee in the last pay period ending on or before 19 March 2020 (which may be the same salary calculated under the CJRS scheme).
- Where an employee has a variable salary, their reference salary is the greater of:
- The wages earned in the same calendar period in the tax year 2019 to 2020;
- The average wages payable in the tax year 2019 to 2020; or
- The average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020.
How are an employee’s hours calculated for JSS Open?
- Where an employee works a fixed number of hours and their pay does not vary according to the number of hours worked, the employee’s ‘usual hours’ are the greater of:
- The hours which the employee was contracted to work at the end of the last full pay period ending on or before 23 September 2020; or
- The hours which the employee was contracted to work at the end of the last full pay period ending on or before 19 March 2020 (which may be the same as the hours calculated under the CJRS scheme).
- Where an employee works variable hours and/ or their pay varies according to the number of hours which they work, the number of ‘usual hours’ is calculated based on the greater of:
- The number of hours worked in the same period in the tax year 2019 to 2020;
- The average number of hours worked in the tax year 2019 to 2020; or
- The average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020.
- In any of the above cases, hours paid as annual leave or statutory leave are included.
JSS Closed is for businesses which are legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK. The employer will be able to claim for two thirds of each affected employee’s normal pay, up to a maximum of £2, 083.33 per month. The employer can, at its discretion, pay more than this.
Who can claim for JSS Closed?
- In addition to the general JSS eligibility criteria outlined above, employers can claim for JSS Closed if their business premises at one or more locations has been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK.
- This includes premises which have been restricted to delivery or collection services only and those restricted to providing food and/or drink outside. However, businesses required to close by local public health authorities as a result of specific workplace outbreaks are not eligible.
- Employers will be able to claim the grant in relation to any employee whose primary work place is at the premises which have been legally required to close, where the employer has instructed the employee to cease work for a minimum period of at least 7 consecutive days. This must be recorded in a written agreement which must be available for viewing by HMRC, if requested.
Further guidance concerning JSS Closed will be published soon.
Conditions relating to both JSS Open and JSS Closed
- Employers will be able to access the JSS if they have enrolled for PAYE online and they have a UK, Channel Island or Isle of Man bank account.
- Employers will be able to claim for any employees who were on the PAYE payroll between 6 April 2019 and 11.59pm on 23 September 2020. If an employee ceased employment after 23 September 2020 but was subsequently rehired, then the employer can claim for them.
- Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme to be eligible.
- Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
- Neither JSS grant will cover National Insurance contributions or pension contributions, both of which remain payable by the employer.
- Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made.
How do I make a claim?
- The Scheme will run from 1 November 2020 to the end of April 2021.
- Employers will be able to claim through the Government’s website here.
- The first claim can be made on 8 December 2020, to cover salary for pay periods ending and paid in November. Subsequent months will follow a similar pattern, with the final claims for April being made from early May.
More detail about the claims process will be published soon.
What about the Job Retention Bonus?
- Employers claiming for a grant under the JSS may still claim for a Job Retention Bonus, in respect of the same employee, if they are eligible.
- The Job Retention Bonus is a £1,000 one-off taxable payment, which can be claimed in respect of each employee which an employer furloughed and then keeps in employment until 31 January 2021.
- The bonus can be claimed between 15 February 2021 and 31 March 2021. The money does not require to be paid to the employee.
- Employers can now find out if they are eligible for the Job Retention Bonus on the Government’s website here.
What about the self-employed?
- On 22 October 2020, the Government also announced an extension to the support available for the self-employed. The Self-Employment Income Support Scheme Grant Extension provides support in the form of two grants, each available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.
- The first grant, covering 1 November 2020 to 31 January 2021 will cover 40% of average monthly trading profits, capped at £3,750 in total. This will be taxable.
- The Government will review the level of the second grant and set this in due course.
- Self-employed individuals who were previously eligible for the Self-Employment Income Support Scheme can claim (although they do not have to have claimed a grant under the previous scheme).
- They will have to make a declaration that they intend to continue to trade and are either:
- currently actively trading but are impacted by reduced demand due to coronavirus; or
- were previously trading but are temporarily unable to continue to do so due to coronavirus.
Further details concerning the claims process are expected to be published shortly.
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Some of our recent insight articles that may be of interest include:
- The Job Retention Scheme
- Employment Unit launches free online clinic
- When is your self-employed consultant actually an employee?