The Chancellor has announced an extension of the Job Support Scheme (JSS) to help protect the jobs of workers in businesses that are told to close due to local or national coronavirus restrictions. It has been widely reported in the press that further restrictions will be announced early this week in order to help curb the spread of COVID-19.
The JSS was announced last month and replaces the furlough scheme from 1 November. The JSS is designed to help protect "viable" jobs in businesses that are facing lower demand over the winter months due to COVID-19. The scheme will enable employers to retain employees in employment but on reduced hours and pay, with the help of a government wage subsidy. To be eligible for the grant, employees must work a minimum of 33% of their normal hours. For the remaining hours not worked, the government and the employer each pay a third of the employee's usual wages. So employees working 33% of their hours will receive at least 77% of their pay, with 22% being funded by a government grant and 55% being paid by the employer (where the government contribution has not been capped). The government contribution is capped at £697.92 a month. For more on how the main JSS scheme works please see our previous update.
Here is what we know so far about the new "expanded" JSS scheme:
Where employers are legally required to close their doors, the government will pay eligible businesses two thirds of each employee's salary (or 67%), up to a maximum of £2,100 per month. Under the scheme, employers will not be required to contribute over and above the government contribution towards wages and will only be asked to cover NICs and pension contributions, which represent a small proportion of overall employment costs. It is estimated that around half of potential claims are likely not to incur employer NICs or auto-enrolment pension contributions, and so there will be no employer contribution to pay in these cases.
In line with the main JSS, payments to businesses will be made monthly in arrears via an HMRC claims service that will be available from early December.
When does the scheme start?
The scheme begins on 1 November 2020 and will be available for six months. It will be reviewed in January 2021.
Employees of businesses that are legally required to close in the period before 1 November are eligible for the Coronavirus Job Retention Scheme (CJRS) up until it closes on 31 October 2020 (presumably under the rules of that scheme).
Which employers can benefit?
The scheme will be available to employers throughout the whole of the UK.
It will cover businesses that, as a result of restrictions set by one or more of the four governments in the UK, are legally required to close their premises. This includes businesses that are required to provide only delivery and collection services from their premises, or food and drink outdoors from their premises.
Businesses will only be eligible to claim the grant while they are subject to restrictions.
Which employees does it cover?
To be eligible an employee must be:
- employed and an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 23 September 2020; and
- furloughed for a minimum of seven consecutive days at any given time.
How does the scheme help employers?
The announcement of this extension to the JSS provides welcome support for employers who are faced with the possibility of having to close their doors this winter. The Chancellor's hope is that this, and the main JSS, scheme will enable employers to retain more jobs through the current crisis, and be able to restart their businesses quickly when the situation improves.
This scheme is more generous than the main JSS which applies to businesses that are open and have work for their employees to do - for at least one third of their normal hours.
What are the limitations of the scheme?
The scheme only applies to business that are forced to close by law. It does not help employers who choose to shut voluntarily because of the impact of COVID-19 on their business. However, employers who decide to reduce their opening hours could potentially claim under the main JSS for support to pay their employee's wages. It also does not help employers who are not subject to restrictions but who have employees that are concerned about returning to work in the current climate. For more on this, please see our update: COVID-19: England sees a return to home working where possible.
It is unclear at present how the forthcoming restrictions may apply; precisely which employers will be able to use this scheme; and whether the new scheme will have a material effect to preserve jobs over the winter.
Further guidance on the scheme is expected to be published by HMRC soon.
What other support was announced?
In addition to the expansion of the JSS, the government also announced that it is increasing the cash grants to businesses in England shut in local lockdowns to support them with fixed costs. These grants will be linked to rateable values, with up to £3,000 per month payable every two weeks, compared to the up to £1,500 every three weeks which was available previously. This could benefit hundreds of thousands of businesses, including restaurants, pubs, nightclubs, bowling alleys and many more.
Small businesses with a rateable value of or below £15,000 can now claim £1,300 per month; medium sized businesses with a rateable value between £15,000 and £51,000 can claim £2,000 per month; and larger businesses can claim £3,000.
These measures will sit alongside the main JSS, which is designed to support businesses that are facing low demand over the winter months - and the £1,000 Job Retention Bonus which encourages employers to keep furloughed staff on their payroll until at least the end of January.
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