Updates to the Job Support Scheme
Updated: Oct 30, 2020
The Coronavirus Job Retention Scheme, also known as Furlough, comes to an end on 31st October 2020, and in its place, with effect from 1st November, will be a new initiative, the Job Support Scheme (JSS). This will open on 1st November 2020 and will run for a period 6 months, up to April 2021.
The scheme is intended to support employees of businesses which are faced with new lockdown restrictions as part of the government’s new three-tier system.
Originally announced on 9th October 2020, the scheme has undergone some significant changes that will affect businesses covered by it.
What has changed?
After its original launch, the Scheme has now been divided into two versions, the Job Support Scheme (Open) and the Job Support Scheme (Closed).
Job Support Scheme (Open)
This is intended to protect jobs in businesses which can operate safely but are facing lower demand over the winter months due to COVID-19.
Employers using this version of the Scheme will also be able to claim the Job Retention Bonus where they meet the eligibility criteria.
For those who consent to be placed on the Job Support Scheme (Open), the employee will have to work a minimum of 20% of their normal working hours. In exchange for doing so, the employee can receive:
Usual pay for the hours actually worked.
5% of usual pay as the employer top-up towards the non-worked hours, which is capped at £125 per month.
61.67% of non-worked hours usual pay as the government top-up, capped at £1,541.75 per month.
As an example, a typical full-time employee in the hospitality industry is paid an average of £1,400 per month. Under the Job Support Scheme (Open), they will still take home at least £1,027 a month. Of this £1,027, their employer will pay a total of £336 a month (made up of 20% of usual hours worked (£280) plus 5% of the hours not worked (£56)) and the government will pay the remaining £691.
These caps are based on a monthly reference salary of £3,125 and this will ensure employees earn a minimum of at least 73% of their normal wages, where those do not exceed the reference salary.
Employers must continue to pay staff as normal for time worked and must also continue to pay Class 1 employer NIC or pension contributions. Tax deductions will also be made as normal.
The Job Support Scheme (Open) will be open to all employers who employ eligible employees, have a UK bank account and a UK PAYE scheme. All employees claimed for under the scheme must have been on the employer’s PAYE payroll between 6th April 2019 and 23:59 on 23rd September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee must have been made to HMRC either on or before 23rd September 2020.
All employers who intend to use the scheme must seek consent from the employees they wish to refer. Such changes must be given to the employee in writing, and best practice is to ask the employee to sign to show express agreement to the changes. This agreement from the employee must be made available to HMRC on request.
Employees cannot be given notice of redundancy if they are working under the Job Support Scheme (Open).
Employees can be put on and taken off the Job Support Scheme (Open) to meet their employer’s needs. However, the employee must be on the scheme for a minimum of 7 days.
The government contribution cap is across the board regardless of the employee’s salary; therefore, this may mean for higher earners the government contribution equates to less than 61.67% of their unworked hours.
Job Support Scheme (Closed)
Where a business has had to close their premises because of either local or national government coronavirus restrictions, under the Job Support Scheme (Closed) the government will pay two-thirds of the salaries for eligible employees affected up to a cap of £2,083.33 per month.
In this situation, the employer will not be required to contribute towards the salaries of eligible employees. The payments made are tax-deductible, and the employer will only be asked to pay the class 1 NIC contributions and pension contributions of its eligible employees.
To be eligible, employees must be working for a business which has had to close due to local or national government coronavirus restrictions. All employees claimed for under the scheme must have been on the employer’s PAYE payroll between 6th April 2019 and 23:59 on 23rd September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee must have been made to HMRC either on or before 23rd September 2020.
All employers who intend to use the scheme must seek consent from the employees they wish to refer for the Job Support Scheme before making a claim. Such changes must be given to the employee in writing, and best practice is to ask the employee to sign to show express agreement to the changes. This agreement must be made available to HMRC on request.
Employees who have a claim submitted on their behalf must be off work for a minimum of 7 consecutive calendar days, with the reason for their absence being that their employer has had to close under the coronavirus restrictions.
Cash grants for businesses required to close in local lockdowns will also increase to a maximum of £3,000 per month.
Any claims submitted must not overlap and will be payable to the employer in arrears via a HMRC claims service that will become available from December 2020. Employers will be able to make a claim on a monthly basis online through gov.uk from 8th December 2020, and this will be reviewed in January 2021.
When a closed business re-opens
Where an employer’s premises closes for COVID-19 restrictions, they can make a claim under the Job Support Scheme (Closed), providing they are closed for 7 consecutive or calendar days and they meet the eligibility criteria. Written consent of the employees must be sought to register on this element of the scheme.
When their business premises re-opens, the employer can then opt to move their employees’ claim to the Job Support Scheme (Open), providing they meet the criteria of the scheme.
As the open and closed business premises elements of the Job Support Scheme have different pay contributions, the employees will need to be asked to sign new consent forms before being changed from one scheme to the other. These forms will need to be kept on file for a minimum of 5 years and made available to HMRC upon request.
There are several other initiatives and schemes designed to help businesses who have been affected by coronavirus and the subsequent lockdown measures. rradarstation advisers will be able to help you with the details of these, to ensure your business gets all the help to which it is entitled.
Caroline Lamyman, Tax Advisor at rradar