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23 October 2020

The Job Support Scheme: Key Facts

The Chancellor announced on 24 September 2020 that the Coronavirus Job Retention Scheme (CJRS), which ends on 31 October 2020, would be followed by the Job Support Scheme (JSS). A further announcement in relation to the JSS, on 22 October, offers a more generous package of measures to support affected businesses than originally envisaged. 

The JSS will have two branches: the JSS Open, which will support businesses that are still operating but facing decreased demand; and the JSS Closed which supports businesses that are legally required to close their premises. Unlike the CJRS, there is a financial eligibility requirement for larger employers (those with 250+ employees) seeking to claim the JSS Open grant.

The JSS will run for six months from 1 November 2020, with a review after three months. Employers will be able make claims, in arrears, from 8 December 2020. Neither the employer nor the employee needs to have benefitted from the CJRS to be eligible. 

Whilst the government has published a factsheet, and more detailed Policy Paper, key guidance and an anticipated further Treasury Direction are not expected until the end of October, leaving employers little time to make final preparations.  

1. Overview of JSS Open

  • In the original announcement in September, employees were expected to be working (and paid) for at least 33% of their usual hours to be eligible, but this has been reduced to 20% in recognition of the ongoing difficulties many businesses face. Employees can do training in working hours while being claimed for under JSS which will count towards 20% of usual hours. 
  • In relation to unworked hours, the government will pay 61.67% of the reference salary (see 6 below) up to a maximum of £1,541.75 per month, and the employer 5% (up to a maximum of £125 per month, with discretion to pay more if they wish).
  • This will ensure employees continue to receive at least 73% of their normal wages where they earn £3,125 a month or less.

2. Overview of JSS Closed

  • This supports businesses that have been legally required to close their premises as a direct result of coronavirus restrictions set by one of the four Governments of the UK.
  • Employees who cannot work will receive two thirds of their normal pay, paid by their employer and fully funded by the government to a maximum of £2,083.33 per month.
  • Their employer has discretion to pay more if they wish.

3. Conditions of claiming for JSS Open and JSS Closed

  • An employer can access the JSS if they have enrolled for PAYE online and have a UK, Channel Island or Isle of Man bank account.
  • Larger employers seeking to claim the JSS Open grant must also meet the financial impact test (see 5 below).
  • It is possible to claim the JSS Open and JSS Closed grant at the same time for different employees.
  • Employers can still claim for the Job Retention Bonus in respect of the same employee if they are eligible. (This is a one-off £1,000 payment for every employee who an employer claimed for under the CJRS and remains continually employed to 31 January 2021, who meets the earnings requirements).
  • Employers cannot claim for an employee who has been made redundant (or is serving notice of redundancy).
  • Grant monies must only be used to reimburse the sums already paid to the employee. Employers cannot enter into any commitment or transaction with the employee which would reduce wages below the amount claimed (e.g. salary sacrifice scheme). 
  • The government expects that large employers will not make capital distributions whilst claiming under JSS. While not a contractual or legal condition, the government encourages businesses to reflect on their responsibilities and that taxpayers should be able to rely on public money only being claimed where it is clearly needed. 
  • The government expects that the JSS grant will not be used by many public sector organisations. Where employers receive public funding for staff costs, and that funding is continuing, the government expects employers to use that money to continue to pay staff. 

4. Eligible employees

  • Eligible employers can claim for employees who were on PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. An RTI Full Payment Submission notifying payment must have been made to HMRC in respect of that employee at some point during that time.
  • If an employee has ceased employment after 23 September and is subsequently rehired, the employer can claim for them.
  • An individual is an employee if they are treated as an employee for Income Tax purposes. They can be on any type of contract including zero hours or temporary.  Agency workers are regarded as employees of an employment agency for the purposes of this scheme. 
  • Employees do not need to have been furloughed under the CJRS to be eligible under JSS.
  • Employers cannot claim JSS Open and JSS Closed in respect of a single employee for the same day.     

5. Financial Impact Test

In order to claim the JSS Open grant:

  • Employers with 250 or more employees on 23 September 2020 must undertake a Financial Impact Test to demonstrate that their turnover has remained equal or fallen to show they have been adversely affected due to coronavirus.
  • The turnover requirements will be assessed depending on how VAT returns are made:
    • Quarterly VAT returns: by comparing total sales figures on VAT returns filed between 31 August 2020 and 7 November 2020, with the total sales figures from the same quarter in 2019.
    • Monthly VAT returns: the comparison is between three consecutive months due to be filed by 7 November 2020 with the same period in 2019.
    • Group VAT returns: turnover figures for the VAT group are used.
  • There are examples of the calculations to be made in the Policy Paper.
  • Employers will need to show that some or all of their employees are working reduced hours, but still working for at least 20% of their usual hours.

6. Reference salary for JSS Open

  • Under JSS Open employers can claim up to a maximum of £1,541.75 per month depending on how many hours the employee works.
  • Claims should commence from the later of the date that the employee starts working or the date when working reduced hours is confirmed in writing, not when the decision is made.
  • Claims are subject to a maximum reference salary of £3,125 per calendar month.
  • The reference salary is made up of regular payments: including regular wages, non-discretionary payments for hours worked (including overtime), non-discretionary fees, non-discretionary commission payments and piece rate payments. Calculations do not include tips, discretionary payments such as bonuses or commission, non-cash payments or monetary benefits. 
  • The reference salary for employees with fixed pay is the greater of wages payable to the employee in the last pay period ending on or before 23 September 2020 and the wages payable to the employee in the last pay period on or before 19 March 2020 (this may be the same salary calculated under CJRS).
  • The reference salary for employees with variable pay 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 and the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020.
  • Further guidance on how to work out the reference salary for JSS Closed will be set out in guidance to be published at the end of October 2020.

7. How are usual hours calculated?

  • Fixed hours employees: usual hours are calculated based on the greater of:
    • The hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
    • The hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020.

This should include hours paid as annual leave and statutory leave.

  • Variable hours employees: usual hours are based on the higher of:
    • The number of hours worked in the same calendar period in the tax year 2019 to 2020
    • The average number of hours worked in the tax year 2019 to 2020
    • The average number of hours worked from 1 February 2020 (or start date if later) until 23 September 2020.

This should include hours paid as annual leave and statutory leave. 

  • There are detailed examples of calculations in the Policy Paper and full rules will be covered in guidance at the end of October 2020.

8. Employer NICs and pension contributions

  • The JSS does not cover NICs or pension contributions. These remain payable by the employer. The Policy Paper states that the employer must deduct and pay to HMRC income tax and employee NICs and employer NICs on the full amount that is paid to the employee including any amounts subsequently met by a scheme grant. 

9. Making the claim

  • Employers will be able to claim from 8 December 2020 covering salary for pay periods ending and paid in November. Subsequent months will follow a similar pattern.    
  • HMRC will check claims and payments may be withheld if suspected to be ineligible.
  • The full amount of any grant must be repaid if the claim is found to be fraudulent.
  • HMRC intend to publish names of employers who have used the scheme. The public can report fraud to HMRC if they have evidence that an employer is abusing the scheme. 
  • Employees will be able to check if their employer has made a JSS claim relating to them.

10. Agreeing to JSS Open temporary working arrangement

Changing the status of employees to reduce hours and reduce remuneration remains subject to existing employment law. Employers will therefore need an express right to make such changes or, more likely, require consent:

  • Under the JSS Open the employer must have reached a written agreement with their employee that they have been offered a temporary working agreement.  
  • A collective agreement reached between the employer and a trade union is also acceptable.
  • A written record should be kept of how many hours employees work and the number of usual hours they are not working.
  • A written record of the agreement must be kept for 5 years.
  • The agreement must be available for view by HMRC on request.
  • HMRC is intending to publish further guidance on what to include in the written agreement by the end of October.

11. Agreeing to JSS Closed temporary working arrangement

As above, employers should discuss any temporary changes to employment contracts with their staff and make them by agreement.

  • Under the JSS Closed employers must have reached a written agreement that they have been instructed to and agree to stop working for a minimum of 7 consecutive calendar days.
  • A collective agreement reached between the employer and a trade union is also acceptable.
  • The employer must keep a record that they have notified the employee of the agreement in writing and keep a written record of the agreement for 5 years.
  • The agreement must be available for view by HMRC on request.

In conclusion

We know there are a lot of details still yet to come, particularly in relation to eligibility for the Closed JSS. It is therefore important to prepare, but not to make final decisions that may need to be unpicked.  Like the CJRS, employers will have to adapt to ongoing changes at short notice.  We will, of course, update our guidance as soon as more detail is available.

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