On 24 September 2020 the Chancellor announced the “Job Support Scheme” (JSS) which is to be launched on 1 November 2020 and will run for 6 months i.e. until April 2021. It forms part of the Winter Economy Plan to support businesses adversely affected by COVID-19.
What does reduced requirement mean?
Under the JSS there is the requirement that in order to be eligible employees must work a minimum of 33% of their usual hours.
How is the Government’s financial contribution calculated?
In respect of the hours not worked i.e. the remaining 67% of their usual hours, the employer will need to pay a third of the wages due.
However, the incentive is that the Government will also pay a grant of a third of the wages for the hours not worked which amount will be capped at £697.92 per month. The employee will forfeit the remaining third.This means that employees will receive at least 77% of their pay, where the government contribution has not been capped.
Does this arrangement need to be agreed with the employee?
Yes. The employee may be due to their full wage if ready willing and able to work even where no work is provided to them. In order to be within the scope of this scheme employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing.
This agreement must be made available to HMRC on request.
Will the grant cover NIC’s or pension contributions?
No. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
What will count as ‘usual wages’ for the grant?
The “usual wages” calculations will follow a similar methodology as for the JRS. Full details will follow in later guidance.
How will reduced hours or pay whilst on furlough impact the calculation?
Those employees who have previously been furloughed will have their usual pay and/or hours calculated by reference to their pre-furlough usual pay and not the amount they were paid whilst on furlough.
How will the grant be paid?
Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution.
Is there a minimum claim period?
Yes. Whilst it is possible to place employees on and off the scheme and they do not have to work the same pattern each month each claim period for a short-time working arrangement must cover a minimum of seven days.
Are all employers eligible?
Small and medium-sized Enterprises (SMEs) will be eligible. SME’s are defined as having fewer than 250 employees and turnover of less than £50 million. This will include over 99 percent of all businesses in the UK. Employers that have not used the JRS will also be able to use the scheme.
Larger businesses may also be eligible if they can demonstrate that their business has been adversely affected by COVID-19. There will be a financial assessment test the details of which will be published in later guidance. It is expected that it will be a requirement to qualify that the business turnover will need to be lower now than before COVID-19.
The government has already stated that it expects that large employers who seek to qualify will not be making capital distributions, such as dividends, while using the scheme.
Can employers claim under this scheme and also receive the Job Retention Bonus?
Yes. Employers using the Job Support Scheme will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
Are all employees eligible?
In order to be eligible employees must have been on an employer’s PAYE payroll on or before 23 September 2020. As with the JRS this means there must have been a Real Time Information (RTI) submission notifying payment of that employee to HMRC on or before 23 September 2020.
There is no requirement that the employee must have been furloughed. However, if an employee has been given notice of redundancy no claim can be made.
How will claims be checked?
HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred meaning there must have been an RTI report to HMRC. Employees will be informed by HMRC directly of full details of the claim made.
The requirement that the employee must work at least 33% of their usual hours will be reviewed after 3 months at which point the Government will consider whether to increase this minimum hour’s threshold.