New Job Support Scheme announced
Following the announcement of the Government on 31 October 2020, the Job Support Scheme (which was due to commence on 1 November 2020) has been postponed until the furlough scheme ends. The furlough scheme has been extended until 31 March 2021. New guidance on the JSS was published on 30 October 2020, but this was marked as withdrawn on 1 November 2020 because of the extension to the furlough scheme. This post will be updated in due course. See our separate post here for further detail on the extension of the furlough scheme.
On 24 September 2020, the Government announced a new Job Support Scheme, which will support the wages of people in work. The scheme will give employers the option of keeping employees in a job on shorter hours, rather than making them redundant. Changes to the scheme, increasing the level of Government support, were announced on 22 October.
This scheme will replace the Coronavirus Job Retention Scheme (CJRS) which ends on 31 October 2020. A factsheet has been published setting out further details of the new scheme and guidance has now been issued.
This post sets out how the Job Support Scheme operates for businesses that are open but facing decreased demand (JSS Open). Our separate post deals with how the Job Support Scheme operates for businesses that have been legally required to close due to Coronavirus restrictions (JSS Closed).
So, what do we know so far?
Job Support Scheme (Open) – key details
The scheme is designed to protect viable jobs in businesses that are facing lower demand over the winter months due to coronavirus.
Which employees are eligible?
Anyone who was employed on an employer’s PAYE payroll between 6 April 2019 and 23 September 2020 is eligible. Employers can only claim for employees that were in their employment on 23 September 2020.
Employees must work a minimum of 20% of their normal hours. The employee will be paid for that work as normal by their employer.
Employees can do training in working hours while being claimed for under the scheme. Hours that the employee spends training are paid for by the employer at their full rate of pay and will count towards 20% of their usual hours.
Each short-time working arrangement must cover a minimum period of seven days.
Employees are eligible even if they have never been furloughed.
More details on employee eligibility will be available in further guidance published by the end of October.
Which employers are eligible?
Employers must have enrolled for PAYE online and have a UK, Channel Island or Isle of Man bank account.
All small and medium sized businesses are eligible to apply. There will be no financial assessment test for those businesses.
Larger businesses (with 250 or more employees on 23 September 2020) are only eligible to apply where a financial assessment test demonstrates that their turnover has remained equal or fallen compared to the previous year to show that they have been adversely affected due to Coronavirus. Further details and examples of the financial impact test are set out in the guidance.
Some or all of the employees must be working reduced hours.
Businesses are eligible even if they have not previously used the furlough scheme.
How does the grant work?
The employer will pay the employee as normal for the hours worked.
The employee will receive 66.67% of their normal pay for the hours not worked. This will be made up of contributions from the employer and from the Government.
The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month. The employer can top this up 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.
The reference salary is £3,125 per calendar month. This will ensure that employees continue to receive at least 73% of their normal wages, where they earn £3,125 per month or less.
The employer will pay Class 1 employer National Insurance Contributions and pension contributions.
Further details and examples of how to calculate an employee’s reference salary and usual hours are set out in the guidance.
Can the employer top up the employee’s wages?
Yes. The guidance clarifies that employers will be able to top up employee wages above the level of minimum contributions at their own expense if they wish.
Is the employee’s agreement necessary?
Yes. Employers must agree the new short-time working arrangements with their employee (or trade union), make changes by agreement, and notify the employee in writing. This agreement must be retained for 5 years and be made available to HMRC on request. Further guidance on what to include in the written agreement will be published by the end of October.
How to claim
Employers will be able to claim online from 8 December 2020, covering salary for pay periods ending and paid in November, and will be paid on a monthly basis. The grant will be paid in arrears, after payment to the employee has been made.
Interplay with redundancy
Employees cannot be made redundant or put on notice of redundancy during the period within which the employer is claiming the grant for that employee. We assume that this is because the aim of the scheme is to support viable jobs as an alternative to redundancy.
This is in contrast with the provisions of the CJRS, which ends on 31 October 2020.
Interplay with the Job Retention Bonus
Employers retaining staff who were furloughed can claim under both the Job Support Scheme and the Job Retention Bonus (if they are eligible).
How long will the scheme run for?
The current Job Retention Scheme will end on 31 October 2020. The new Job Support Scheme will run from 1 November 2020 for six months to April 2021. The Government will review the terms of the scheme in January.
Comment
The aim of the scheme is to protect viable jobs; to target firms that need support; and to incentivise employers to bring back previously furloughed employees.
The JSS (Open) scheme is now more generous than initially announced. However, employers will still need to assess whether it is financially viable for them. Unfortunately, the scheme may not be a viable option for some employers. In contrast with the CJRS, under the Job Support Scheme there must be enough work to keep the employee working for at least 20% of their normal working hours. If there is not, unfortunately redundancy may be the only option once the CJRS ends. However, the Government has announced that the Job Support Scheme has been expanded to protect jobs and support businesses required to close their doors as a result of coronavirus restrictions. For further information on this expansion of the scheme, please see our separate post here.
Further guidance will be published by the end of October.
Originally posted 24 September 2020. Updated 13 November 2020.
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©2020 SCRASE LAW LTD. THIS POST IS FOR GENERAL INFORMATION ONLY AND IS NOT ADVICE. YOU ARE RECOMMENDED TO SEEK COMPETENT PROFESSIONAL ADVICE BEFORE TAKING ANY ACTION ON THE BASIS OF THIS POST