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On 24th September 2020, the government announced a new Job Support Scheme (JSS) which was due to open for applications on 1st November 2020, to replace the outgoing Coronavirus Job Retention Scheme (CJRS). The new scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19.
As a result of the second lockdown in England announced on 31st October 2020 and due to run from Thursday 5th November and finish at 00.01 on Wednesday 2nd December, the Job Support Scheme, which was scheduled to come in on Sunday 1st November, has been postponed until the extended CJRS furlough scheme ends, this is likely to be early December. You can find the latest detail on the CJRS scheme in our Coronavirus Job Support Scheme guide for employers.
There were further updates to the scheme announced on the 9th October and the 20th October (see below) as restrictions were tightened across many areas of the UK. The scheme is due to run until 30th April 2021, the government has said it will review the terms of the scheme in January 2021.
The new scheme is not a direct replacement for the outgoing CJRS. There are two versions of the new scheme, ‘JSS Open’ and ‘JSS Closed’, depending whether a business is open, and adversely affected by coronavirus, or legally required to close. The scheme is not a direct replacement for the outgoing CJRS.
The JSS will start once the CJRS is closed, this is set to be 2nd December 2020 and is due to run until 30th April 2021. The government will review the terms of the scheme in January 2021.
Employers will be able to claim in arrears from some time in December 2020 using an online system. The grant will only be paid after the claim has been approved by HMRC. Neither the employer nor the employee needs to have used the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
Please note: The JSS is not available to the self-employed; there's a separate scheme which we explain in our Self-Employed Income Support Scheme Knowledge article.
JSS Open
Under JSS Open, employers will continue to pay an employee for time worked, but the cost of employee wages for hours not worked will be split between the employer and the government (through wage support) and the employee (through a wage reduction). Importantly, the employee will keep their job.
Employees will need to work at least 20% of their usual hours. Employers will continue to pay employees for the hours they work, and the government will pay a contribution of 61.67% of the usual pay for hours not worked, up to a maximum of £1,541.75 per month. Employers will pay 5% of the usual pay for hours not worked, up to a maximum of £125 per month, and can top this up further if they choose. This means employees should receive at least two thirds of their usual pay for hours not worked.
The caps are reduced according to the proportion of hours not worked. Further guidance on this will be available on gov.uk shortly, we will also update this article.
Employers will need to cover all employer National Insurance and pension contributions.
JSS Closed
The Chancellor increased the financial support available to businesses and workers. Under the expansion, businesses whose premises are legally required to shut for some period over winter as part of local or national restrictions will receive grants to pay the wages of staff who cannot work. The government are calling this ‘JSS Closed’.
JSS Closed will provide support to businesses whose premises are legally required to close as a direct result of coronavirus restrictions set by one of the four governments of the UK. This includes premises restricted to delivery or collection-only services from their premises, and those restricted to providing food and/or drinks outdoors.
Under JSS Closed, the government will support eligible businesses by paying two-thirds (or 67%) of each employees’ usual wages up to a maximum of £2,083.33 a month.
Employers will not be required to contribute towards wages, though they can top up their employees wages if they choose to. Employers must still cover their National Insurance Contributions and their pension auto-enrolment contributions under the expanded scheme.
Businesses will only be eligible to claim the grant while they are subject to Tier 3 restrictions and employees must be off work for a minimum of seven consecutive days. The expanded scheme will begin on 2nd December 2020 (subject to final confirmation due to the extension to the CJRS scheme) and will be available for six months, with a review point in January 2021. In line with the rest of the JSS, payments to businesses will be made in arrears, via the HMRC claims service that will be available from some time in December 2020. Employees of firms that have been legally closed in the period before 2nd December 2020 are eligible for the Coronavirus Job Retention Scheme.
22nd October announcement by the Chancellor
On 22nd October 2020, the Chancellor announced a further expansion of the JSS to cover businesses that remain open, but are experiencing reduced demand or are in difficulty due to the increased restrictions imposed locally. It’s hoped the expansion will allow businesses to keep staff on and the government is increasing its contribution to wage costs to help with this.
The announcement reduces the employer contribution required for any hours an employee does not work to 5%, and reduces the minimum hours that an employee is required to work to 20% of normal hours (down from 33%), so those working just one day a week will be eligible. That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer will pay wages of £44.
The government has published a fact sheet to help implement the scheme. The key issues are summarised below.
Eligibility for the Job Support Scheme
Neither the employer nor the employee needs to have previously used the outgoing CJRS. All small and medium-sized businesses are eligible to use the new scheme. Larger businesses will need to meet specific financial criteria to be eligible.
To be eligible for the scheme employees must have been on an employer’s PAYE payroll on or before 23rd September 2020. This means a Real-Time Information (RTI) submission notifying payment to that employee to HMRC must have been made to HMRC on or before 23rd September 2020.
Employees will be able to enter and leave the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven consecutive days. The temporary working arrangement needs to be confirmed in writing by the employer to the employee.
We’ve prepared an example letter(word 8kb) to use to notify your employees should the JSS closed scheme be applied to their employment.
What the grant covers
Grant payments will be made in arrears, so the employer will have to pay the total reduced salary, then make a claim under the scheme to receive the government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions. These contributions will remain payable by the employer.
“Usual wages” calculations will follow a similar methodology to the CJRS. Full details will be set out in guidance shortly. Employees who have previously been furloughed will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
Employers must pay employees their contracted wages for hours worked, and the government and employer contributions for hours not worked. The government’s expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
What does it mean to be on reduced hours?
On the JSS Open scheme, the employee must be working at least 20% of their usual hours. For the time worked, employees must be paid their normal contracted wage. For the time not worked, the employee will be paid up to two-thirds of their usual wage.
Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the Job Support Scheme grant for that employee.
How to claim for the Job Support Scheme
The scheme will be open from 2nd December 2020 to the end of April 2021. Employers will be able to make a claim online through the gov.uk website from 8th December 2020 and will be paid on a monthly basis.
Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
Other information
HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred.
Employers must agree to the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
HMRC plan to inform employees of the full details of any claim made by their employer relating to them.
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