Watch our recent webinar on the Job Support Scheme here.
On 22 October 2020, the Chancellor announced further changes to the Job Support Scheme (JSS) with the stated purpose of saving more jobs. The announcement came following widespread concern from businesses that they would not receive much-needed support following the end of the Coronavirus Job Retention Scheme (CJRS) particularly in the case of those businesses based in tier-two areas facing reduced demand due to increased Coronavirus restrictions. The "JSS Open", as it is now being called by the Government, significantly widens the financial support available to businesses following the end of the CJRS. Under the updated scheme, employers will have to contribute less to their employees' wages, the Government will contribute more and employees will be required to work fewer hours.
Further details have also been provided in relation to the JSS in place for those businesses that are legally required to close their premises as a direct result of Coronavirus restrictions set by one or more of the four governments of the UK. This is now known as the "JSS Closed".
The intention behind the schemes is to provide different types of support to businesses so they can get the right assistance, at the right time, according to their situation. The JSS opens on 1 November 2020 and will run until 30 April 2021.
Given the fast-paced nature of the changes, we have set out what we know so far and some practical steps employers can take now to prepare for the JSS.
What do we know about the JSS Open so far?
The key terms of the JSS Open are as follows:
- It is open to all employers, even if they have not previously used the CJRS provided that they have a UK PAYE scheme and a UK bank account. However, employers with 250 or more employees on their payroll on 23 September can only access the JSS Open if they meet a financial impact test. This requires them to show that their turnover has remained equal or fallen compared to the previous year based on their VAT returns. Small and medium employers will not have to meet any financial tests to participate in the scheme.
- It is not limited to those employers based in areas affected by tier-two restrictions.
- The number of hours employees are required to work has now been reduced from 33% of their usual hours to 20%. Employers must pay their employees as normal for those hours. Employees can undertake training in their working hours being claimed for.
- The employer must contribute 5% towards the hours not worked by the employee up to a maximum of £125 per month, with the discretion to pay more than this if they wish.
- The Government will pay the remainder of 61.67% of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This more than doubles the maximum Government payment from the £697.92 previously promised when the JSS was initially announced. Employees participating in the JSS Open will therefore receive at least 73% of their normal wages, where they earn £3,125 a month or less.
- Employers will be able to claim the grant from HMRC in arrears from 8 December 2020. Payments will only be made by HMRC to the business after the claim has been approved - employers will not therefore be able to defer payments until they receive the grant and the monies must be used to pay employees;
- Employers can only claim for employees who were on their payroll between 6 April 2019 and 23 September 2020. That said, if employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them.
- An employer can claim the JSS Open and JSS Closed grant at the same time for different employees. However, an employer cannot claim for a single employee under both schemes at the same time.
- As with the CJRS, the JSS Open will be open to workers as well as employees if they are treated as an employee for income tax purposes. In addition, employees can be on any type of contract, including zero hours or temporary contracts.
- The Government have been clear that they expect that large employers (i.e. those with 250 or more employees) and their corporate groups using the scheme will not pay dividends or make other capital distributions whilst claiming the grant albeit this will not be a "contractual or legal condition" of the scheme. However, businesses are encouraged to reflect on their "responsibilities" since, in essence, the Government's policy paper published on 22 October 2020 states that the public needs to rely on public money only being claimed where it is clearly needed. This, coupled with the fact that HMRC intends to publish the list of employers applying for the grant, suggests that employers who do claim the grant and make capital distributions can expect to be subjected to both public and political scrutiny which may be unpalatable for some employers.
- Employers cannot make a claim for a grant for an employee who has been made redundant or who is serving a contractual or statutory notice period during the claim period. Employers must therefore meet the costs of the employee's wages and termination payments in the normal way if it undertakes a redundancy consultation.
- To be eligible for the grant, employers must have reached a written agreement with their employees setting out the terms of the temporary working agreement which must cover seven consecutive days. The agreement must be available for view by HMRC on request.
- The grant will not cover National Insurance contributions (NICs) or pension contributions. These contributions remain payable by the employer.
- Employers must deduct and pay to HMRC income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.
What about the JSS Closed?
The majority of the conditions for claiming the JSS Open also apply to the JSS Closed save in respect of the working obligations and the financial impact test for large employers. In order to be eligible for the grant, the premises must be legally required to close (with some exceptions for delivery or collection only services) and the employees must have been instructed to cease work for a minimum period of at least seven consecutive calendar days. Each employee who cannot work due to these restrictions 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, although their employer has discretion to pay more than this if they wish.
Unfortunately there is little time for employers to get to grips with the detail of the JSS given that further guidance is not due to be published until the end of October and the JSS comes into force on 1 November 2020.
For employers who may be able to benefit from the JSS Open, we would suggest taking the following steps now:
- Identify whether your business is eligible - in particular, if you are a larger employer, does your business meet the financial impact test?
- Identify whether the scheme will be of benefit to the business. If so, start the process of identifying the relevant employees to place on the scheme and commence discussions with employees and any unions about agreeing reduced hours and pay.
- Start drafting the agreements to put in place the changes in terms and ensure that these are signed up to by employees,
- If redundancy processes are already under way, consider whether to pause such procedures in order to assess whether the scheme can assist in avoiding such redundancies.
- For larger employers, consider, if possible, suspending capital redistributions in order to be able to participate in the scheme.
- If your business is not eligible, or you do not believe the scheme will benefit the business, consider whether other workforce measures will be required (such as redundancies, lay-off, pay cuts or other change to terms).
Taking the above steps will help employers to act promptly when more details emerge. If you would like any advice or assistance please contact the employment team, details below. Please also watch our recent webinar on the JSS.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.