Hassle Free HR – Job Support Scheme (JSS)

CURRENTLY ON HOLD.

What is the Job Support Scheme?  

The purpose of the scheme is to replace the Job Retention Scheme (JRS) when it ceases to operate. The aim of the Job Support Scheme (JSS) is the same as that of the JRS, the Government hopes that it will prevent wide-scale redundancies and help Companies to retain employees who are in “viable roles”. The scheme will come into force on <DATE TBC> and run for 6 months until the end of <DATE TBC>. The scheme will be reviewed after it has been in operation for 3 months, at which point certain aspects may change.

On 9 October 2020, Rishi Sunak announced an “extension” for this scheme that will apply to businesses that are legally mandated to close due the “Three Tier System”. On 22 October 2020 a subsequent announcement acknowledged the complaints and concerns of many Tier One and Tier Two employers, who did not feel that the JSS went far enough to truly support those who will continue to suffer a financial detriment as a result of Coronavirus and associated Tier One and Tier Two measures. The amount of support offered by the Government was increased, and the Government confirmed that the scheme will now be referred to as the “Open Job Support Scheme” (OJSS) or the “Closed Job Support Scheme” (CJSS) depending upon whether employers have a legal right to remain open or not. Both aspects of the JSS are detailed below.

We are still waiting for more details to be released on both the OJSS and the CJSS. The Government have confirmed this information will come <DATE TBC>.

The Open Job Support Scheme (OJSS)

Eligible Employers

  • Any employer with a UK, Channel Island or Isle of Man bank account who has enrolled for PAYE online can benefit from this scheme. However, the scheme is aimed at small and medium enterprises (SMEs) only.
  • Large employers (employers with 250 or more employees on <DATE TBC>) will have to undertake a Financial Impact Test to show they have been adversely affected due to Coronavirus. (If their turnover has remained equal or fallen, this will be considered adversely affected.) This test will only need to be completed once before the first claim.
  • Large employers who are VAT registered will also be required to submit their VAT returns, which should also demonstrate that the Company has been adversely affected. More information can be found here.
  • Employers with staff costs that are fully publicly funded (even if they are not in the public sector) are not eligible for the OJSS. However, employers can use the scheme if they receive partial but not full public funding, if their private revenue has been disrupted by Coronavirus.
  • Employers do not need to have benefited from the JRS to be eligible to claim from the OJSS.

Eligible Employees

  • The scheme is designed for “viable jobs” this means job roles where employees still have work to complete but less work than normal, due to a reduced demand for service, etc. To be eligible, employees must be working fewer than their usual / contractual hours, but at least 20% of their usual hours.
  • Employees who were on the Company’s PAYE payroll, and received a payment of wages, between <DATE TBC> and 11:59pm on <DATE TBC>. Individuals who were employed on or before <DATE TBC>, but who did not receive a payment by that date, are not eligible for the scheme.
  • Employees who were employed before <DATE TBC>, but who then left their employment, can be rehired and considered eligible for the scheme. However, employers are under no obligation to rehire any ex-employee.
  • Employees can be on any type of contract of employment, including zero hour contracts or temporary / fixed term contracts of employment.
  • An individual is classed as “an employee” if they are treated as an employee for Income Tax purposes.
  • Agency workers will be regarded as employees of an employment agency for the purposes of the OJSS, provided they meet the definition of an employee specified in the above bullet point.
  • Employees do not need to have benefited from the JRS to be eligible for the OJSS.

Employee Agreement  

  • Employers must seek and obtain written agreement before enrolling employees in the OJSS. A “notice” of the scheme, where the employee is “told” that their hours will be reduced so they can benefit from the scheme, is not acceptable.
  • It is unlikely that employees will withhold agreement when it is explained that the OJSS is an alternative to being laid-off or made redundant.
  • A record of the written agreement must be retained for a minimum of 5 years, as the HMRC have confirmed that they will be conducting audits and asking for evidence of employee agreement.
  • We have a template letter which can be used to seek agreement and place an employee on the OJSS. Please contact us for more information / if you would like to use this letter.

Important Rules

  • Employees benefiting from the scheme cannot be made redundant.
  • Employees can “rotate” on and off the scheme, similar to how employees could under the CJRS. Details on how to rotate employees on and off the scheme are yet to be confirmed.
  • The hours employees work under the scheme can vary from week to week, as long as the minimum 20% is met.
  • Each reduced working arrangement must last for at least 7 calendar days.
  • Large employers who benefit from the OJSS will not be strictly prohibited from making capital distributions, such as dividend payments, but this is being strongly discouraged.
  • Employees will be able to undertake voluntary training in non-working hours. If the training is mandatory, minimum wage entitlement will apply, at the sole responsibility of the employer.
  • Equality and discrimination laws apply to the OJSS, so employers must consider equality and protected characteristics when deciding which employees will benefit from the OJSS and should avoid any decisions that could be viewed as placing an employee at a disadvantage / treating someone unfairly due to a protected characteristic.
  • Employers must keep a record of how many hours each employee works, and the number of hours the employee would usually work, whilst the employee benefits from the scheme. HMRC may request sight of this information.

Employee Payment

  • The employer must pay the employee their normal / contractual wages for all hours worked, (which will be a minimum of 20% of the employee’s usual working hours).
  • For every “usual hour” the employee does not work, (80% of their working time, if the employee is only working 20% of their usual hours), the Government will pay 61.67% of the lost earnings, capped at £1,541.75 per month.
  • For every “usual hour” the employee does not work, (80% of their working time, if the employee is only working 20% of their usual hours), the employer will pay 5% of the lost earnings, capped at £125 per month.
  • This means that an employee who works the least amount of time possible under the scheme (20% of normal hours) will receive at least 73% of their normal earnings, where they earn £3,125 per month or less.
  • When calculating “usual wages” or “usual hours”, employers need to use the employee’s “reference salary”. Separate methodology is applied depending on whether the employee works fixed or variable hours:
    • Fixed Hours: for employees who are paid a fixed salary, the reference salary is the greater of the wages payable to the employee in the last pay period ending on or before <DATE TBC>, or the wages payable to the employee in the last pay period ending on or before <DATE TBC>. This may be the same as the salary calculated under the CJRS.
    • Variable Hours: for employees whose pay is variable the reference salary is the greater of the wages earned in the same calendar period in the tax year 2019 to 2020, the average wages payable in the tax year 2019 to 2020, or the average wages payable from <DATE TBC> (or the employee’s start date if later) until <DATE TBC>.
  • The “reference salary” should be made up of the regular payments an employer is obliged to make, which includes regular wages, non-discretionary payments for hours worked (including overtime), non-discretionary fees, non-discretionary payments, and piece rate payments.
  • The “reference salary” cannot include any discretionary payments where the employer is under no obligation, such as tips (including those distributed through troncs), discretionary bonuses, discretionary commission payments, non-cash payments, and non-monetary benefits in kind or salary sacrifice schemes that reduce an employee’s taxable pay.
  • When calculating the hours an employee usually works, the methodology is the same as when calculating an employee’s “reference salary”, so the same time periods should be used, etc. Hours paid as annual or statutory leave should be included in the calculation. More information on working hours can be found here.
  • If an employee previously benefited from the JRS, the employer cannot use the wages received under the JRS to calculate “usual wages” and must instead use the employee’s earnings prior to the JRS i.e. their normal former contractual earnings.
  • Employers can choose to “top up” employees’ earnings by paying above the minimum required 5%, at their own expense.

National Minimum Wage (NMW) / National Living Wage (NLW)

  • Employees must receive their usual contractual pay for any hours worked under the scheme. This means that they must receive at least the NMW or NLW for these hours, whichever is applicable.
  • Employees must also receive NMW or NLW for any time spent completing mandatory training.
  • Employees do not have the right to receive NMW or NLW for any hours that are not worked, as long as they have confirmed their agreement to participate in the scheme in writing.

Tax, National Insurance and Pension Contributions

  • The money provided by the Government will not cover employer taxes, National Insurance or Pension contributions. Employers will remain liable for these payments, unless the employee has opted out of the workplace pension scheme.
  • It is expected that employer contributions will be amended to reflect the lower earnings of the employees who benefit from the JSS, although this is yet to be confirmed. We will confirm this as soon as we are able to.
  • Wages of employees benefiting from the JSS will be subject to Income Tax and National Insurance contributions as usual. Employees will also pay automatic enrolment contribution on qualifying earnings, unless they have chosen to opt-out of the workplace pension scheme.

How to Claim

  • Claims can only be submitted in respect of wage costs in the given pay period after payment to the employee has been made and that payment has been reported to the HMRC via an RTI submission.
  • The grant will be paid in arrears to reimburse the employer for the Government’s contribution. Employers must ensure the employee receives the correct sum on payday, employers cannot take a “we’ll pay part now, part when we’re reimbursed” approach.
  • The period claimed for must last at least 7 calendar days.
  • As the scheme opens on <DATE TBC>, claims can be made via an online portal from <DATE TBC> onwards. Further information on how employers should claim, or what information will be necessary to submit a claim, is yet to be published.

A Helpful Example

Sarah normally works five days per week and earns £1,400 per month.

Under the OJSS, she works 20% of her normal hours. She has therefore lost 80% of her usual earnings, which is £1,120.

Sarah’s employer pays her £280 for the hours she works, and a further 5% of her unworked hours, which is £59.

The Government then provides £691, which is 61.67% of her unworked hours.

Sarah receives a total of £1,027 per month under the OJSS.

The Closed Job Support Scheme (CJSS)

In response to the Government announcements on 9, 12 and 22 October 2020, the CJSS has been introduced, which will provide additional financial support to businesses that have been legally required to close due to the local lockdown measures / the newly introduced Three Tier System. Employers who choose to close their workplaces because they are concerned for their employees’ health and safety or the financial impact of remaining open, but who have the legal right to remain open, will not be eligible to benefit from either the OJSS or the CJSS.

Eligible Employers

  • Employers who have been legally required to close their premises as a direct result of Coronavirus restrictions set by one of more of the four Governments of the UK can benefit from this scheme.
  • “Closure” includes business whose premises are restricted to delivery or collection only services.
  • Any employer with a UK, Channel Island or Isle of Man bank account who has enrolled for PAYE online can benefit from this scheme.
  • An employer who is required to close as a result of workplace outbreaks, or because of instruction from the local public health authority, are not eligible for CJSS.
  • Employers do not need to have benefited from the JRS to be eligible to claim from the CJSS.

Eligible Employees

  • Employees who cannot be offered any work, because their workplace has been legally required to close, will be eligible to benefit from this scheme.
  • Employees who were on the Company’s PAYE payroll, and received a payment of wages, between <DATE TBC> and 11:59pm on <DATE TBC>. Individuals who were employed on or before <DATE TBC> but who did not receive a payment by that date, are not eligible for the scheme.
  • Employees who were employed before <DATE TBC>, but who then left their employment, can be rehired and considered eligible for the scheme. However, employers are under no obligation to rehire any ex-employee.
  • Employees can be on any type of contract of employment, including zero hour contracts or temporary / fixed term contracts of employment.
  • An individual is classed as “an employee” if they are treated as an employee for Income Tax purposes.
  • Agency workers will be regarded as employees of an employment agency for the purposes of the OJSS, provided they meet the definition of an employee specified in the above bullet point.
  • Employees do not need to have benefited from the JRS to be eligible for the OJSS.

Employee Agreement  

  • Employee agreement rules for the CJSS are the same as the rules for the OJSS.
  • We have a template letter which can be used to seek agreement and place an employee on the CJSS. Please contact us for more information / if you would like to use this letter.

Important Rules

  • Employees benefiting from the scheme cannot be made redundant.
  • The workplace must be legally required to close for at least 7 calendar days.
  • Employees will be able to undertake voluntary training in non-working hours. If the training is mandatory, minimum wage entitlement will apply, at the sole responsibility of the employer.
  • Employers must keep a record of how many hours each employee works, and the number of hours the employee would usually work, whilst the employee benefits from the scheme. HMRC may request sight of this information.

Employee Payment

  • The Government will solely fund employee wages under the CJSS. The Government grant will cover two thirds (67%) of the employee’s usual pay, up to a maximum cap of £2,083.33 per month.
  • It is expected that the rules for calculating an employee’s “usual hours” and “usual earnings” will be the same as they are for the OJSS, however this is yet to be confirmed. We will provide clarity on this issue as soon as we are able to.

National Minimum Wage (NMW) / National Living Wage (NLW)

NMW or NLW rules for the CJSS are the same as the rules for the OJSS.

Tax, National Insurance and Pension Contributions

Tax, National Insurance and Pension Contribution rules are the same as the rules for the OJSS.

How to Claim

The rules on how to make a claim under the CJSS are the same as the rules for the OJSS. This means that employers will be required to pay their employees 67% of their earnings (capped at 2,083.33 per month) and this money can then be claimed back from the Government. We will provide more information on how to submit a claim as soon as we are able to.

Last reviewed on 9 November 2020