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 was clear that the scheme would not be extended but he had 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, the tightening of lockdown both locally and nationally and the introduction of the 3 tier system.
In a statement to the House of Commons on 24 September 2020, Mr Sunak announced the introduction of the Jobs Support Scheme (JSS). Since then, he has also announced the JSS Expansion, which will support organisations that have been forced to close due to Government Coronavirus restrictions. This is now being called by the Government ‘JSS Closed’. You can read about that here.
On 22 October 2020 Rishi Sunak announced changes to the original limits and requirements of the JSS so that it is now, ostensibly, more generous with the hope that it will protect further.
This article focusses on the main JSS (also now called ‘JSS Open’) and has been updated to take account the further announcement on 22 October 2020.
When does the Job Support Scheme start?
The JSS will open on 1 November, immediately following the end of the CJRS.
When will it end?
It will last for six months, through to April 2021 however the increased support announced on 22 October 2020 will be reviewed in the New Year.
Can all employers use it?
In principle, all employers can access the JSS 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 (those employing over 250 employees across all payrolls as at 23 September 2020) will be required to meet a financial assessment test – they will need to show that their turnover has remained equal or has decreased compared to the previous year. Detailed guidance on how large employers can carry out the assessment can be found here – which in the main is linked to VAT returns.
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) or Charities.
As with the CJRS fully publicly funded bodies are not expected to use the scheme but if an organisation is partially publicly funded then they could be eligible if they can show that private revenues have been disrupted and they meet the other requirements. If you are in receipt of public funding you should contact your sponsor department or respective administration for further guidance.
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.
It has been confirmed that all staff, including those on agency contracts (provided they are employees for Income Tax purposes) or variable hours contracts, will be eligible.
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. Until the JSS is reviewed in the New Year employees must work at least 20% of their “usual hours”. Usual hours for these purposes will be calculated in a way similar to the CJRS – full details of how to calculate usual hours and the amounts you should pay your employee can be found here.
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 20%) but each working arrangement must be for a minimum period of at least seven consecutive days.
Employees will be able to undertake training voluntarily in non-working hours. Where time spent on training attracts a minimum wage entitlement in excess of the grant payment, employers will need to pay the additional wages.
Employees can also do training in working hours while being claimed for under the JSS. Any hours spent training at the request of their employer can count towards the 20% of their usual hours and will need to be paid by the employer at their full rate of pay.
Some employees will no doubt be concerned that being on reduced hours through JSS will impact on their future entitlement to parental pay such as maternity allowance, statutory maternity/, paternity, shared parental, adoption and parental bereavement pay. The Government has confirmed they will put measures in place to ensure that future entitlement to parental pay is not impacted if an employee works reduced hours through under the JSS.
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 JSS 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. Any hours worked will need to be paid in line with the current National Minimum Wage rates.
For any time not worked the employee will be paid a total of two thirds of their usual wage, up to a cap – as set out below:
- employers will pay 5% of non-worked hours, capped at £125 per month;
- employers will pay NICs and automatic enrolment pension contributions in full as a contribution;
- the Government will contribute 61.67% of non-worked hours, capped at £1,541.75 per month.
The grant must be used to pay the employee.
Employers can top up employee’s wages above the 5% contribution at their own discretion.
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 £1,541.75 a month per employee – this means that anyone earning more than around £37,125 a year will be getting less than the Government 61.67% of non-worked hours. 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 20% of their usual hours and does not have their wages capped by the Government ceiling, they will receive 73% of their usual pay (20% from their employer for the worked hours; 48% from Government (being a 61.67% of the balance of usual hours); and 5% from their employer.
Employers must maintain records which can be requested by the HMRC. Employers should therefore ensure that, for each employee:
- the agreement is consistent with employment, equality and discrimination laws;
- written records of the agreement are kept for five years;
- they keep records of how many hours the employee works and the number of usual hours they are not working; and
- keep a copy of the agreement.
The Government has announced that it intends on publishing the details of employers who claim under the JSS and also enable employees to check whether they have been claimed for under the JSS.
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. If you make someone redundant, you therefore have to pay their notice in full and cannot claim monies under the JSS to cover this. At the point of giving notice of redundancy you have to stop claiming under the JSS.
Remember also that for employees with more than 2 year’s service you may also have to consider the fairness of the dismissal and weigh up whether it might be fair or financially appropriate to keep employees on the JSS rather than make then redundant. This was the same as with the CJRS.
For further information in relation to fairness and redundancy processes see here.
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?
As far as we know at the moment, 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 £1,560 (gross) throughout the tax months:
- 6 November to 5 December 2020;
- 6 December 2020 to 5 January 2021; and
- 6 January to 5 February 2021,
Which works out to an average of £520 a month. 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 40% of average monthly profits up to a total of £3,750. 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 whether the April 2020 National Minimum Wage increase will now need to be taken into account (for non worked hours) and whether employers will be able to claim for employees who transferred them following a TUPE transfer. We will be updating our articles as soon as we hear more.
The Government’s hope is that the JSS 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 25% of wages plus NI and pension contributions for an employee only working 20% 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.