Following our last article (which can be found here), the job support scheme has been further changed. First to include support for businesses forced to close due to coronavirus restrictions (known as JSS Closed) and most recently on 22nd October 2020 to address the disparity in other government support compared with JSS Closed and reduce the minimum number of hours employees must work (from 33% to 20%) to be eligible for support under JSS Open. In this article, our employment team discuss the changes, what we now know, and the steps employers need to take now to ensure they are ready to utilise the scheme.
Although we now have more information, detailed HMRC guidance in relation to the JSS is expected at the end of October 2020 (so this week), meaning that employers have very little time to prepare if they want to access the scheme from 1 November 2020. As in our last update, the JSS opens on 1 November immediately after the closure of the Coronavirus Job Retention Scheme (CJRS). It will run for six months until 30 April 2021. The JSS has now effectively been split into two separate and distinct parts; JSS Open and JSS Closed.
What are the key points about the JSS Open (for businesses, which have not been forced to close)?
Employees must work (and be paid by their employer for) a minimum of 20% of their "usual" hours (e.g. one day a week for employees that ordinarily work 5 days). The 20% minimum hours requirement is a key component of the JSS Open. However, some businesses may not be able to guarantee at least 20% of an employee's working hours every week. Guidance is awaited on whether this minimum requirement must be satisfied in respect of every seven-day period or whether usual hours can be averaged out over a longer period of, say, a month. Employees do not have to work the same pattern each month. However, each short-time working arrangement must cover a minimum period of seven consecutive days.
The employee will not be paid for the remaining one third of unworked hours, meaning that employees will receive up to 66.67% (two-thirds) of their wages for unworked hours (made up of a government contribution of up to 61.67% capped at £1541.75 a month and the employer paying 5% up to £125 per month). The caps are based on a monthly reference salary of £3,125.00. This ensures that employees earn a minimum of at least 73% of their total normal wages, where these do not exceed the reference salary. Employers may voluntarily top up this contribution.
The grant will not cover Class 1 employer national insurance contributions (NICs) or pension contributions, which will remain payable by the employer in respect of both the government and employer payments for unworked hours (and pay for hours actually worked). To be eligible, employees must have been on their employer's PAYE payroll between 6 April 2019 and 23 September 2020. An RTI full payment submission notifying payment in respect of an employee must have been made to HMRC at some point between 6 April 2019 and 23 September 2020. There is no requirement that they were previously furloughed under the CJRS.
Employees will be able to "cycle on and off the scheme" and will not have to work the same pattern each month, but each short-time working arrangement must cover at least seven consecutive days. Employees cannot be made redundant or given notice of redundancy during the period for which their employer is claiming the grant for them.
All small and medium-sized businesses, regardless of sector, can participate in the JSS (with the exception of fully publicly funded bodies). Larger businesses with 250 or more employees will only be eligible to make claims under JSS Open if their turnover has fallen during the COVID-19 pandemic and the government expects that they will not be making capital distributions (such as dividends) while using the JSS.
The JSS Open is available to employers throughout the UK with a UK bank account and a UK PAYE scheme registered before 23 September 2020, regardless of whether they have used the CJRS. Employers who retain previously furloughed staff on shorter hours will be able to claim under both the JSS Open and the Job Retention Bonus (JRB) scheme. The government grant can only be used as reimbursement for wage costs actually incurred, so employers cannot defer payment to employees until they have received payment from the government.
For JSS Open, claims should commence from the later of the date that the employee starts working reduced hours or the date when working reduced hours is confirmed in writing, not when the decision is made. This means that it is important to have written agreements in place by 1 November 2020 if the employer wishes to claim from the start of the JSS Open.
What are the key points about the JSS Closed
The JSS Closed is only available for employers who are legally required to close their business for at least 7 days (including businesses that are restricted to delivery or collection only services and those restricted to the provision of food and drink outside). Unlike the JSS Open, large employers will not face a financial impact test (but there is an expectation that they will not make capital distributions).
The government will pay two-thirds of eligible employees' normal pay up to £2,083.33 per month. Employers will not be required to contribute to employees' pay, but they will be required to cover employer Class 1 NICs and auto-enrolment pension contributions, and can voluntarily "top up" the government's contribution. Employees must have been on their employer's PAYE payroll on or before 23 September 2020. There is no requirement that they were previously furloughed under the CJRS.
An employee cannot be made redundant or put on notice of redundancy during the period in respect of which their employer is making a claim. Claims must not overlap and must be made monthly in arrears.
What steps must employers take to put employees on the JSS?
As both schemes involve reduced (or no) working hours and a reduction in pay, employees will need to consult with affected employees and to agree those changes in writing. As above, for JSS Open, claims should commence from the later of the date that the employee starts working reduced hours or the date when working reduced hours is confirmed in writing, and so it is vital for employers to have written agreements in place by 1 November 2020 if the employer wishes to claim from the start of the JSS Open.
Should you require support and assistance in relation to the job support scheme, including preparing agreements, our experienced advisors will be able to provide practical advice to support your business through the process. For advice, contact our employment & HR team at firstname.lastname@example.org or call us on 029 2009 5500. You can also book an appointment with one of our team at a time to suit you, by clicking here.
The information contained in this article is for information purposes only and is not intended to constitute legal advice.