Job Support Scheme: Key changes announced
On 22 October 2020, the Chancellor announced significant changes to the Job Support Scheme (“JSS”) in order to provide additional support to help employers retain employees through the winter months. The government has also published this detailed policy paper on the operation of the JSS.
As a result, we now have some of the detail we were expecting when the JSS was first announced. However, further guidance is expected by the end of October 2020.
We have summarised the key issues for employers below.
1. The JSS is now formed of two separate schemes – “JSS Open” and “JSS Closed”:
a. JSS Open is aimed at employers who can operate safely but face reduced demand, and will give them the option of keeping employees in a job on shorter hours rather than making them redundant; and
b. JSS Closed is aimed at employers who have been legally required to close their premises as a direct result of the government’s coronavirus restrictions, and will give support with wage costs for employees who therefore cannot work. We previously updated you on this here, and as at the time of writing, there are no changes proposed to JSS Closed.
2. Both JSS Open and JSS Closed will go live on 1 November 2020 and are intended to run for six months, with a review in January 2020.
3. Under JSS Open, an employee will now only need to work and be paid as normal for at least 20% of their normal hours, not 33% as originally announced. This means that employees working just one day per week will be eligible.
4. For the employee’s remaining unworked hours, the government will pay up to 61.67% of the employee’s normal wages (previously 33%), up to a maximum of £1,541.75 per month. This cap has increased from £697.92 in the original announcement.
5. The employer’s contribution has reduced to 5% of the employee’s unworked hours, down from 33% as originally announced. There is a maximum cap of £125 per month, although employers can pay more if they choose to.
6. This means that employees will continue to receive at least 73% of their normal wages where they earn £3,125 per month or less.
Which employees are eligible for JSS Open and JSS Closed?
— Employers can only claim for employees that were on their payroll on 23 September 2020. However, if employment ceased after 23 September 2020 and the employee was then rehired, a claim can still be made.
— Any type of employment contract is covered, including staff on variable or zero hours contracts, temporary contracts and agency workers.
— Employees do not need to have been furloughed under the CJRS to be eligible for the JSS.
— New legislation will be introduced as soon as possible (covering maternity allowance, statutory maternity/paternity, shared parental, adoption and parental bereavement pay) to avoid parents losing out on entitlement to parental pay as a result of being put on the JSS.
Which employers can claim JSS Open?
The policy paper sets out the following details:
— Employers with 250+ employees on 23 September 2020 must have undertaken a Financial Impact Test (“FIT”) demonstrating that their turnover has remained equal or has decreased compared to the previous year in order to be eligible under the JSS.
— Employers with less than 250 employees on 23 September 2020, and charities of any size, do not need to undertake a FIT and will be eligible.
Which employers can claim JSS Closed?
Eligible employers will be able to claim the JSS Closed grant for employees whose primary workplace has been legally required to close as a direct result of coronavirus restrictions set by the government, and where that employer has instructed work to cease (and that work ceases) for a minimum period of at least seven consecutive calendar days. Further guidance on this will be published.
How should employers calculate “normal wages” and “normal hours”?
Calculations will follow a similar methodology as for the CJRS. Some details and examples are included in the policy paper, and further details on this will be published. Employees who have previously been furloughed will have their underlying normal pay and/or hours used to calculate normal wages, not the amount they were paid whilst on furlough.
What agreement needs to be reached with employees?
Employers should consult with employees and make any changes to employment contracts necessitated by JSS Open or JSS Closed by written agreement.
The temporary working agreement (in the case of JSS Open) and the agreement to stop working (in the case of JSS Closed) must both cover at least seven consecutive days.
In addition, employers must keep detailed records, and when deciding which employees will be asked to cease work, or work reduced hours, normal employment law, and in particular discrimination laws, will apply in the usual way.
What can employees do outside of JSS Open?
Employees can take part in training in working hours while being claimed for under the JSS Open. These hours are to be paid for by the employer at an employee’s full rate of pay and will count towards 20% of their usual hours.
It is currently unclear whether employees can work for a different employer during their non-working hours and still be eligible under JSS Open.
What about redundancies?
Employers cannot claim under the JSS for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
What about tax and pension contributions?
Employers must deduct and pay income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a JSS grant.
Employers and employees must also continue to pay pension contributions based on the auto-enrolment minimums (unless the employee has opted out).
What about the Job Retention Bonus
Employers claiming under the JSS may still claim the Job Retention Bonus in respect of the same employees if they are eligible.
Are JSS funds subject to clawback?
Yes. The amount of any overpayment by the employer must be paid back to HMRC where a claim contains incorrect information. In addition, the full amount of any JSS grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount overclaimed may be applied where appropriate.
HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect JSS claim. In addition, HMRC intends to publish the names of employers who have used the JSS.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. For advice, get in touch with your usual Greenwoods GRM contact or scroll down to complete our enquiry form.