JOB SUPPORT SCHEME -REVISED

The Job Support Scheme (JSS) has changed considerably from the original announcement, Since it comes into force on 1 November, employers have to make some decisions quickly. Rishi Sunak, the Chancellor of the Exchequer, announced new changes a few days ago.

The new proposals are much more generous than the original scheme. There are still some questions which will need to be answered before we can be certain of the calculation but there is enough information available to get close.

The HMRC information sheet still says, “Further guidance will be published shortly”. So, HMRC isn’t entirely clear about the rules.

Really, there are now two JSS schemes – “JSS Closed” and “JSS -Open”.

“JSS Closed” is for businesses which have been legally required to close as a direct result of coronavirus restrictions set by government. It also includes premises restricted to delivery or collection only services from their premises and those restricted to the provision of food and/or drink outdoors.

“JSS Open” is for businesses which are not legally obliged to close but which have been affected and can offer staff some work, but not normal hours.

JSS Open

To qualify for JSS Open an employee must work a minimum of 20% of their usual hours and the employee must have been employed by the business before 23 September and not be under notice. The employee must also have been included on a RTI (Real Time Information) submission made to HMRC on or before 23 September. For most businesses this probably means that the employee must have started employment before the end of August (although this varies depending on pay dates and frequency).

Now it starts getting complicated.

The employee must have worked a minimum of 20% of usual hours in the claim period.

The employee will be paid their normal rate for the time worked.

In addition, the employee will receive a “top up” of up to 66.67% of normal pay. This top up will be made up of 5% of normal pay from the employer and the balance from the government.

The employer “top up” is no longer restricted to a maximum of £125 per month and an employer can choose to pay more. The government “top up” is capped at £1,541.75 per month.

Overall, most employees will, therefore, receive 73% of normal pay.

As we understand the scheme, if an employee works more than 20% of usual hours, the government contribution will reduce accordingly. The employer can either choose to reduce their contribution or pay more.

That’s probably as clear as mud. There has been a massive groan from every business providing payroll services because they are now frantically trying to work out how to do the calculation.

Overall, the scheme sounds quite good, enabling employers to retain staff they might otherwise let go.

Employers which keep employees in a job will probably also become entitled to the Job Retention Bonus of £1,000, provided they qualify.

Downside

One downside is that, while the government is contributing to wages, the employer still remains responsible for employer National Insurance Contributions and any Employer Pension contribution, so the employer top up is actually more than 5%. Because NI and pension are dependent on individual circumstances, it isn’t possible to give a figure for these.

There is a definition of “usual hours” which gives more options than the furlough scheme. It is the higher of

the average number of hours worked in the 2019/20 tax year
the number of hours worked in the same calendar period in the 2019/20 tax year
The average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020. [Note that this covers two tax years and a part month]

JSS Closed

This is a more generous scheme and only applies to those businesses which have been legally required to close.

In simple terms, the government will pay two thirds of normal pay for any employee who have had to cease work in eligible premises which are required to close.

The cap is £2,083.33 per month, although an employer can pay more if it wants.

The government will not cover the cost of NI or Pension contributions so there is a cost to the employer.

Contract of Employment

It is important that there must be a written agreement between employer and employee in which the employee confirms that they have been offered and accepted a temporary working arrangement.

The agreement must comply with equality and discrimination laws.

HMRC can ask to see this agreement and, if it doesn’t exist, can refuse or claim back any payments made.

While we cannot give indemnified advice on contract wording, we can put you in touch with associates specialising in this. Please contact us.

Other considerations

It is possible for an employee to be on both schemes in a pay period, but not on the same day.

Extra rules apply to large employers, generally defined as employers with more than 250 employees. If you need more details about these rules, please ask us.

HMRC will publish details of all employers claiming under the scheme. This is so that employees can check if an employer has claimed for them – and to encourage whistle blowing.

There will be legislation introduced to protect rights to parental pay (SMP, SPP, SAP & Shared Parental Leave).

Further information

This scheme is complicated. We will obviously advise and help our own clients, although we will try to help anyone else but any such advice must be limited and anyone seeking help should contact their own adviser.

You can contact us via the usual channels: