Further amendments to the Job Support Scheme (JSS) were announced by the Chancellor at the end of last week. Jessica Clough looks at what those changes are and the effect on employers.
Recap on the JSS
The JSS will commence on 1 November 2020, following the end of the Job Retention Scheme (JRS) and Flexible Furlough Scheme (FFS) on 31 October 2020, and will run for 6 months. The JSS is designed to protect “viable jobs”. Although the scheme as initially announced covered a proportion of employees’ wages where the employee was working a minimum of 33% of their pre-covid hours, the government has now announced a more generous approach.
Due to the rise in coronavirus numbers requiring Level 3 lockdowns, the JSS was broadened to support businesses which were temporarily forced to close due to national or local coronavirus lock-down restrictions in their area (now referred to as “JSS Closed”).
There have now been further changes to the scheme to assist those employers who have not been forced to close. The amended scheme is referred to as “JSS Open”.
What is JSS Open?
Under the terms of JSS Open, where an employee is able to work but, because of government restrictions or covid-19, their employer can only offer reduced/part time hours of work, the employer will continue to pay the employee’s “usual wages” for those part-time hours which the employee is working. For all of the employee’s remaining hours not worked, the government will then pay 61.67% of their usual pay (up to a maximum of £1,541.75 per calendar month), and the employer will pay 5% (up to a cap of £125 per calendar month), taking employees’ pay to a minimum of 73% of their usual wages (where the contributions have not been capped).
Employers are allowed to “top up” the wages of those on the JSS if they wish.
The JSS grant from the government does not cover either Class 1 employer NICs or minimum auto enrolment pension contributions so employers will be responsible for these payments.
The employee works 20% of their normal hours and are paid in full by their employer for these worked hours. Of the 80% of hours not worked:
Government will pay 61.67% of their normal pay for these hours (80 divided by 100 = 0.8 x 61.67 = 49.33% of total pay)
Employer will pay 5% of their normal pay for these hours (0.8 x 5 = 4% of total pay)
Where the employee works more than 20% of their normal hours then the proportion of unpaid hours and government support will vary (subject always to the cap). For example, if the employee worked 50% of normal hours, the employer pays in full for the hours worked, with an additional contribution of 2.5% of total pay for the non-worked hours, and the government contributes 30.83% of total pay for non-worked hours, meaning the employee would receive 83.33% of their normal pay (assuming the cap on the contributions was not reached).
If instead the employee works 70% of their usual hours, the employer would pay for the worked hours, and 1.5% for the non-worked hours, while the state pays 18.5% for the non-worked hours, so the employee would receive 90% of usual pay (assuming the cap on the contributions was not reached).
Who is eligible - employees?
The key difference between the JSS and the JRS is that employees must NOT be made redundant or be subject to any redundancy notice during the period for which the employer is claiming the JSS. To be eligible:
The employee’s role must be viable
Their working hours cannot drop below 20% of normal working hours.
They must have been on their employer’s PAYE payroll on or before 23 September 2020.
The JSS is available for employees, zero hours workers, temporary workers and agency workers (where they are your employees for income tax purposes) who fulfil the payroll requirement. Employees who were on the payroll on 23 September 2020 but who were dismissed and subsequently rehired are also eligible.
Subject to the 20% minimum requirement, the percentage hours worked can vary while on the JSS, but must be fixed for a minimum period of 7 days.
Employees can “cycle on and off” of the scheme, so employees could go back to full time working for a period before dropping back to reduced hours.
Who is eligible – employers?
JSS Open is available to all employers who have a UK bank account and are registered for PAYE. However, larger employers (i.e. those with 250 employees), will need to complete a Financial Assessment Test to show that their business has been impacted, that their turnover has remained equal or decreased when compared to the previous year, and that some or all of their employees are working reduced hours. Also, it is expected large employers would not pay dividends to shareholders while using the scheme.
How do employers make changes to employees’ hours and pay?
Receiving support under the JSS necessitates changing an employee’s contractual working hours and pay; effectively the employee is being placed on a short-time working arrangement. Similar to the JRS, employers must agree the new working arrangements and pay with their employees and any changes must be agreed in writing. The written note of the change may also be requested by HMRC.
As well as contractual obligations, employers should also remember their obligations relating to discrimination in how they select employees to be placed on the JSS.
What should employers do now?
Although the amended JSS Open scheme will benefit employers more than the Scheme originally proposed, it is still not as generous as the JRS. Employers should review their workforces, pipelines and customer demand and make some difficult decisions. If it is unlikely that a role will be “viable”, then employers should remember their legal requirements under redundancy – and potentially collective redundancy – rules and take advice.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.