Among ever changing guidance, the government recently announced a new Job Support Scheme to take effect on 1st November 2020. Originally announced at the end of September, it was extended to support businesses required to close and, as of last week, has been updated to reduce the costs to employers. As a result of changing rules and the forced closure of businesses, particularly in the hospitality industry, this scheme will now effectively have two strands:
The more general JSS Open scheme will take effect from 1st November 2020 and last for 6 months. It will apply where an employee is working on reduced hours - a minimum of 20% of their usual hours – and the government will make a contribution to their wages. Importantly, this means the scheme will not support employees for whom there is no work at all, so it may not avoid redundancies in such cases.
All UK employers with a UK bank account and UK PAYE scheme will be eligible to apply, although large business will have to demonstrate that their turnover has been negatively affected by the pandemic by carrying out a Financial Impact Test (this is explained on the government website). They also should not be making capital distributions such as dividends.
The employer must pay the employee for the hours worked. For every hour not worked, the employer must pay 5% of their wages, and the government will pay 61.67% to take the total contribution for unworked hours to two thirds of the usual wages. This means that an employee working the minimum of 20% of their hours will receive the following:
This means that an employee on the minimum number of hours would receive 73% of their usual pay. This is slightly less than the initial version of the scheme, but the contribution required from employers is significantly lower. The contributions will differ if the employee is working more than the minimum 20% of hours.
To be eligible, the employee must have been on the employer’s PAYE payroll between 6th April 2019 and 23rd September 2020 and have had a payment submitted to HMRC at some stage in that period. The employee must be working less than their usual hours, and this must be a minimum of 20% of their usual hours. The employee must not be serving their notice and cannot be made redundant while subject to the scheme. The employee does not previously have to have been furloughed to be eligible for the Job Support Scheme. Employees can cycle on and off the scheme and the short-time working pattern can vary, but each period of short-time working must last at least 7 days.
The government payment for each employee is capped at £1,541.75 per month. Employers National Insurance Contributions and pension contributions are not covered by the government payment, so the employer will also have to pay these contributions on the total amount (including the wages paid by the government). Further, the employer will be reimbursed by the government in arrears, so has to pay the full amount to employees initially and then make a claim, with the first claims being permitted from 8th December 2020.
The Chancellor has announced that the Scheme will be expanded to support UK businesses required to close due to government coronavirus restrictions.
This means that businesses whose premises are legally required to close for some period due to local or national restrictions will receive grants towards payment of the wages of staff who cannot work as a result. This extends to businesses who are restricted to delivery or collection only services, so could be claimed by restaurants who have had to close and operate as takeaway only. This will likely be of some assistance to businesses in the hospitality industry who have had to close, as well as venues such as nightclubs which have not yet been able to open again. However, it does not cover businesses which can open but are subject to reduced hours, nor does it cover any workplace which is advised to close by public health authorities due to a specific outbreak of the virus.
The JSS Closed scheme will also run over the previously announced period of six months from 1st November 2020 and is subject to the same rules as the JSS Open scheme generally, but with an increase in the amount which can be claimed and the requirement being for employees not to be working at all. Eligible businesses will be able to claim two thirds (67%) of each employee’s salary, up to a maximum of £2,083.33 per month. Employers will not be required to contribute towards wages or to top up this payment, although they can choose to do so, but they will have to cover all employer’s national insurance contributions and pension contributions where applicable.
The grant can only be claimed while businesses are subject to restrictions and the employees must be off work for a minimum of seven consecutive days.
Until 1st November 2020, employees in affected businesses can still be furloughed if they have been furloughed previously, although at this stage the employer must contribute 20% of wages and pay NICs and pension contributions.
An employer can be making claims under both versions of the scheme at the same time for different employees, but not for the same employee. This means, for example, that a business which is required to close can claim under the JSS Closed for any staff who cannot work as a result (such as waiting staff in a restaurant), but they might have managerial or administrative staff still working, who could be subject to the JSS Open if they are working reduced hours.
If you wish further details in respect of the Job Support Schemes, we can provide a briefing note which contains the following: