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What is the Job Support Scheme and what do employers need to know?
We have known for some time that the Coronavirus job retention scheme (CJRS) will come to an end on 31 October 2020. Rishi Sunak has been clear that the scheme would not be extended but he has been coming under increasing pressure to put something else in its place, particularly from the CBI and the unions and particularly with the rise in cases in recent weeks and tightening of lockdown both locally and nationally.
In a statement to the House of Commons earlier today, Mr Sunak announced the introduction of the Jobs Support Scheme (JSS).
When does the Job Support Scheme start?
The Job Support Scheme will open on 1 November, immediately following the end of the CJRS.
When will it end?
It will for six months, through to April 2021.
Can all employers use it?
In principle, all employers can access the Job Support Scheme provided they have a UK bank account and are registered with HMRC. It does not matter if an employer accesses the JSS having not previously used the CJRS.
However, whereas the CJRS operated on a blanket basis regardless of size of business, the JSS is intended to benefit particularly smaller business. Large businesses will be required to meet a financial assessment test – they will need to show that their turnover is lower now than it was earlier in the year, due to the impact of Covid-19. The Government has also stated that it would not expect large businesses to be making capital distributions such as dividend payments or share buybacks whilst claiming under the JSS. No such assessment will be required for small and medium enterprises (SMEs).
The Government’s explanatory note does not include a definition of a “large business” or an SME or give any indication of what levels of adverse effect in turnover will be required. Guidance has been promised on the JSS and we hope that that will provide this further level of detail.
Can all employees be claimed for through the Job Support Scheme?
Employees must have been on the employer’s PAYE payroll on or before 23 September 2020 – in practice, the scheme requires that a Real Time Information (RTI) submission must have been made to HMRC notifying payment to that employee on or before 23 September 2020. Provided that date requirement is met, we currently anticipate that all kinds of employees will be covered, irrespective of the kind of contract they work under.
Do employees have to be working some hours?
Yes. This is not intended to replace the full furlough we saw at the beginning of lockdown. It is something closer to the flexible furlough scheme that operated from July onwards.
The intention of the scheme is to support viable jobs. For the first three months of the scheme, employees must work at least 33% of their “usual hours”. We anticipate that usual hours for these purposes will be calculated in a way similar to the CJRS. The explanatory note issued by Government on the JSS indicates that that the minimum 33% working hours requirement will be reviewed after three months and may be increased.
Employees do not have to consistently work the same number or pattern of hours throughout the scheme. They can be taken on and off the scheme and can work different numbers and patterns of hours (provided at least 33%) but each working arrangement must be for a minimum period of at least seven (we think calendar) days.
Do employees have to agree to the changes?
Yes. As with furlough, this amounts to a contractual variation. The explanatory note is, unfortunately, not as clear as it could be about what will be expected around this. It states that employers must agree the new working arrangements with employees, make any changes to the employment contract by agreement and notify the employee in writing. Our interpretation is that the requirement to “notify” is a reference to recording the agreement that has been reached and should not be taken as an indication that employers will be able to use the scheme unilaterally. Employers should keep a copy of the agreement reached since it can be requested by HMRC.
How do I decide who to claim for?
In the same way as for furlough, the usual employment and equality laws will apply. This means that any selection of who is claimed for under the JSS must be fair and non-discriminatory. In principle, we see no legal issues with you claiming for the same people under the Job Support Scheme as you did under the CJRS but if you are not claiming for all of your employees, you will need to use a fair selection process. That probably means not just automatically assuming that those who have been furloughed should remain those who have short-time working arrangements under the JSS. You should reflect on your current business needs and current workforce and may then need to adopt a simplified selection matrix or criteria.
What will employees be paid?
Employers will be required to pay employees in full, at their usual salary, for all hours worked.
For every hour not worked, both the Job Support Scheme and the employer will pay one third of the usual hourly wage, i.e. employees will be paid up to two-thirds of their usual wage for any time not worked. The guidance issued so far confirms that “usual wages” will be calculated similarly as for the CJRS but importantly, for anyone who was furloughed, the reference pay/hours should be their usual pay/hours, not their furlough adjusted pay/hours.
Government contributions will be capped at £697.92 a month per employee – this means that anyone earning more than around £37,000 a year will be getting less than the Government 22%. The contributions will not cover employer’s NICs or pension contributions, which must continue to be paid by the employer.
As with the CJRS, it is for the employer to make payment to their employees and to claim the grant back through the JSS in arrears.
Where an employee works 33% of their usual hours and does not have their wages capped by the Government ceiling, they will receive 77% of their usual pay (33% from their employer for the worked hours; 22% from Government (being a third of the balance of 66% of usual hours); and 22% from their employer (being another third of the balance of 66% of usual hours).
Can employees be made redundant whilst in the Job Support Scheme?
No – this is an important difference from the CJRS. In the CJRS, it has been possible for employees to be on notice and for their wages to be claimed through the CJRS. This is not going to be permitted under the JSS – employees cannot be made redundant or put on notice of redundancy during a period when their employer is making a claim for them under the JSS.
How do employers claim?
The portal for making claims should be open from December 2020. Claims will be made online at www.gov.uk and paid on a monthly basis in arrears. At the point of making a claim, an employer needs to have paid their employee and reported that payment to HMRC via an RTI return.
The Government’s explanatory note states that it is intended that employees will be informed directly by HRMC of full details of the claim. This is different from the CJRS, which required employers to give information to their employees of claims made.
Is this intended to replace the Job Retention Bonus?
No, the JSS is in addition to the Job Retention Bonus. The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee whom they previously claimed for under the CJRS and who remains continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between 1 November 2020 and 31 January 2021 and payments will be made from February 2021 onwards. Further information on the Job Retention Bonus can be found here.
What about the self-employed?
Mr Sunak announced that the existing grant for self-employed individuals will be extended on similar terms to the JSS. The new scheme will be known as the Self Employment Income Support Scheme Grant and will cover three months’ worth of profits for the period from November 2020 to the end of January 2021. That period may be extended to the end of April 2021, depending on circumstances. The grant will cover 20% of average monthly profits up to a total of £1,875 (a far lower level than previous grants for the self-employed). Eligibility criteria for the scheme will be the same as for previous self-employed grants.
Is there going to be more information about the Job Support Scheme?
The Government’s explanatory note refers to “guidance” and we hope that this will be issued soon. There are still unanswered questions around definitions of large businesses and SMEs, the level of required turnover decrease and, importantly, whether the April 2020 National Minimum Wage increase will now need to be taken into account. We will be updating our articles as soon as we hear more.
The Government’s hope is that the Job Support Scheme will enable more people to keep their jobs through to Spring 2021, by which there is optimism that the economy will be on its way to recovery and we will be further along the path to having a vaccine for Covid-19. The JSS might help but for some employers, paying 55% of wages for an employee only working 33% of the time just won’t be viable. It remains to be seen whether the JSS achieves the Government’s aim or if it will turn out to be a further delay of large-scale redundancies on top of those many employers have already had to make.
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