The Government has announced major changes to the Job Support Scheme which replaces the Coronavirus Job Retention Scheme from 1 November 2020.
Here we answer some of the key questions regarding the latest developments to the scheme.
What is the Job Support Scheme?
The Job Support Scheme (JSS) was first announced on 24 September 2020 to provide wage support where there was a reduced need for employees to carry out work due to the impact of coronavirus. To qualify for support, it was a requirement that employees still worked at least a third of their `usual hours'. The employers would need to pay for those hours worked. For every hour not worked the employer would need to pay a third of the wage, the government would pay a third (capped at £697.72 per month) and the employee would forfeit a third.
What has changed?
Concerns had been expressed regarding the requirements for employees to work at least a third of their normal hours and for the employers to pay for at least a third of the hours not worked.
On 22 October 2020 significant reforms to the scheme were announced which appear to largely be in response to those concerns. The requirement that the employee work at least a third of their normal hours has been changed so that employees will qualify for the scheme even if they work just one fifth or 20% of their normal hours. In addition, the employer’s contribution to pay for those unworked hours has been reduced from 33% to just 5% and will be subject to a cap of £125 per month.
This means that the government will provide an increased contribution of up to 61.67% of wages for hours not worked and the cap has been more than doubled from £697.92 up to £1541.75 per month.
What about businesses that have to close?
There are now two distinct forms of JSS. There is the JSS Open for businesses that can remain open and have a reduced need for working hours and there is the JSS Closed which is for 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.
The JSS Closed was announced on 9 October 2020 and has a lot more similarities with the Job Retention Scheme (JRS) which will come to an end on 31 October 2020. It was initially described as an expansion to the original JSS to support businesses across the UK required to close their premises due to coronavirus restrictions. Under the JSS for closed businesses the government will pay two-thirds of the employees’ salaries up to a maximum of £2,083.33 per month if the employees cease work and the business retains them.
Can any employer use these schemes to claim grants?
Any employer can use the JSS Closed if they are legally required to close under Regulations issued by one or more of the four governments of the UK.
However, in order to be eligible to claim under the JSS Open, the employer must have had fewer than 250 employees as at 23 September 2020.
In order for larger employers to become eligible, they will need to complete a Financial Impact Test to show that their turnover has remained equal or has decreased compared to the previous year because of coronavirus then they will qualify.
Can claims for grants be made in respect of any employee?
Grants can only be claimed for employees who were on the PAYE payroll at some point between 6 April 2019 and 23 September 2020. This means an RTI Full Payment Submission notifying payment in respect of that employee must have been made to HMRC in that period. Employers will not be able to make claims under the scheme for employees who started after 23 September 2020.
However, if an employee was employed prior to 23 September and payroll submissions made to HMRC they will qualify if they have left and have since been re-employed.
There is no requirement that the employee must have been furloughed.
Are there other costs the employer has to meet?
Yes, under both the JSS Open and JSS Closed the employer will be required to pay pensions and National Insurance Contributions on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.
There will also be the accrual of paid holiday right and depending on the contract terms there may be other benefits that will continue.
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 have entered into a written agreement with the employees confirming the short-time working arrangement or non-working period if the business is closed. If terms are determined by collective agreement the written agreement may be between the employer and the union.
In all cases, the agreement must be available to view by HMRC on request and be kept for at least 5 years.
Is there a minimum period for these agreements?
Yes, the short-time working or non-working period must be for a minimum of 7 consecutive calendar days.
How is the pay calculated when claiming the grant?
For employees who are paid a fixed salary the grant may be based on the wages payable to the employee in the pay period before 23 September 2020 or 19 March 2020 whichever is the greater. The latter having been the same salary calculated under the JRS for furlough pay.
If the pay is variable the grant may be based on 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 or the average wages payable from 1 February 2020 until 23 September 2020.
The calculation will in all cases be subject to the caps.
What are the ‘usual hours’ when agreeing on short-time working?
The ‘usual hours’ under the JSS are defined in a similar way to the reference pay. So, for employees with fixed hours, this will be the greater of the contracted hours as at the end of the last full pay period before 23 September 2020 or 19 March 2020.
Where the employee has no fixed hours, their usual hours are defined as the higher of the number worked in the previous tax year or the same month in the previous tax year or the average number of hours worked from 1 February 2020 until 23 September 2020.
How will the grant be paid?
The full wages will need to be paid to the employee and a return made to HMRC before claiming for the grant. HMRC will only reimburse wages paid.
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.
Can employees be made redundant whilst we are claiming wage support under the JSS?
No unlike the JRS the JSS excludes employers from making a claim in respect of any period when the employee has been given notice of dismissal.
If we have introduced short-time working and then need to close can we claim both grants?
Employers cannot claim under both the JSS Open and the JSS Closed in respect of a single employee for the same day. The claims will have to cover different periods.
If we top up employee wages so they get 100% will we be unable to claim the grants?
No employers will be able to top up employee wages above the level of minimum contributions at their own expense if they wish.
How does the JSS impact National Minimum Wage requirements?
Employees are entitled to the National Living Wage, National Minimum Wage or Apprentices Minimum Wage for the hours they are working so for JSS Open, at least minimum wage rates must be paid for all hours worked or treated as worked.
Can employees carry out training during the non-worked hours?
Employees will be able to undertake training voluntarily in non-working hours.
However, where employees are asked to carry out training the time it takes will need to be taken into consideration and if it attracts a minimum wage entitlement in excess of the grant payment, employers will need to pay the additional wages.
How will claims be checked?
HMRC will check claims. The full amount of any grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount overclaimed may be applied where appropriate. HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect Job Support Scheme grant claim.
In any event, HMRC intend to publish the names of employers who have used the scheme and employees will be able to see if their employer has made a claim relating to them via their Personal Tax Account.