Chancellor Rishi Sunak announced a further amendment to the Job Support Scheme, which is due to begin on 1 November 2020.
When originally announced, the JSS required employees to work a minimum of 33% of their normal hours. This has now been reduced to 20%, meaning that employees working as little as one day a week are now eligible for the scheme.
Additionally, the employer contribution to the ‘unworked’ hours has been significantly reduced from 33% to just 5%. This could have a huge impact on businesses and enable more employees to be kept in work.
Employers will also continue to receive the £1,000 Job Retention Bonus.
No changes have been made to the JSS for those businesses legally required to close.
What does this mean for employers and employees?
HMRC has now published a policy paper containing more details on the Job Support Scheme.
The schemes will now be known as JSS Open and JSS Closed, the latter being for those businesses which have been required to close under lockdown regulations.
JSS Open Scheme
Under JSS Open, an employee will need to work at least 20% (no longer 33%) of their normal hours. They will receive normal pay for the hours they work, and two-thirds of pay (subject to a cap for those earning more than £3,125 a month) for the hours they do not work.
For that two-thirds top-up, the government will pay 61.67% and the employer will pay 5%, plus NI and pension contributions on the full amount. That is a significant change from the previous guidance, shifting the financial cost overwhelmingly to the public purse.
There must be a written agreement between employer and employee, agreeing to the changes. We have included a new template with this guidance that now overrides the previous template issued.
JSS Closed Scheme
Under JSS Closed, the position remains that the employee will receive two-thirds of their normal wages, funded by the government (again, with a cap for those who earn more than £3,125pm). The employer will have to pay the NI and pension contributions on that amount.
Again, there must be a written agreement between employer and employee, agreeing to the changes. A template is included with this guidance.
The following applies to both schemes
Employers can top up wages beyond the amounts provided for in the scheme. This is another change; the first version of the JSS indicated government expectation was that employers would not top-up wages beyond the scheme.
All SMEs are eligible, and large business are eligible if their turnover has fallen due to coronavirus (according to their VAT returns). The government says it discourages, but will not prohibit, a large business from claiming on the JSS if it is making capital distributions (such as dividend payments).
Fully funded public sector employers cannot claim, but public sector employers who receive funding at least in part from private sources can claim if their private funding has been disrupted.
Employers will claim in arrears for salary monies already paid. The first claims can be made from 8 December 2020 (i.e. 5 weeks after the scheme opens on 1 November) via an online portal, similar to the Coronavirus Job Retention Scheme.
Employees being made redundant
Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period. It is unclear whether this covers employees serving notice for reasons other than redundancy.
How to calculate your claim
To calculate the amount of pay: for employees who are paid a fixed salary, the ‘Reference Salary’ is the greater of:
- the wages payable to the employee in the last pay period ending on or before 23 September 2020
- the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme
For those who receive variable pay, the ‘Reference Salary’ is 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 (or the employee’s start date if later) until 23 September 2020
There are complex rules to work out ‘normal hours’ in sections 5.2 and 5.3 of the policy paper.
A Treasury Direction is expected to be issued soon. We will update you again once we have visibility of this.
This advice is being reviewed and updated regularly and is currently in line with HMRC, UK Government and ACAS guidance as updated 23rd October 2020.
Should you require any further advice or guidance please call us on our usual HR number of 0191 2058020 or send us an email.