Hassle Free HR – Job Support Scheme
What is the Job Support Scheme?
On 24 September 2020, Rishi Sunak introduced this new scheme as part of the Winter 2020 budget. The purpose of the scheme is to replace the Coronavirus Job Retention Scheme (CJRS) which will cease operation on 31 October 2020. The aim of the Job Support Scheme (JSS) is the same as that of the CJRS, the Government hopes that it will prevent widescale redundancies and help Companies to retain employees who are in “viable roles”. The scheme will come into force on 1 November 2020 and run for 6 months until the end of April 2021. 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 to a local lockdown / the “Three Tier System” they fall in to. Information on this extension is detailed at the bottom of this page.
Who is Eligible?
- Any employer with a UK bank account and a UK PAYE scheme can benefit from this scheme. However, the scheme is aimed at small and medium enterprises (SMEs).
- Large employers will be expected to meet a financial assessment to show their turnover is lower now than it was before the Coronavirus pandemic. It has not yet been confirmed what the Government defines as a “large employer” or what the “financial assessment” will involve, but we will confirm this information as soon as we are able to. SMEs will not have to take part in a financial assessment to benefit from the scheme.
- 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 33% of their usual hours.
- Employees who were on the Company’s PAYE payroll, and received a payment of wages, on or before 23 September 2020. Individuals who were employed on or before 23 September 2020, but who did not receive a payment by that date, are not eligible for the scheme.
- Employers and employees do not need to have benefited from the CJRS to be eligible for the JSS.
- Employers must seek and obtain written agreement before enrolling employees in the JSS. 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 JSS is an alternative to being laid-off or made redundant.
- A record of the written agreement must be retained for a minimum of 6 years, as the HMRC have confirmed that they will be conducting audits and asking for evidence of employee agreement. We are in the process of creating template letters that can be used for seeking employee agreement and explaining the JSS in more detail. We will provide these letters as soon as possible.
- 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 presented.
- The hours employees work under the scheme can vary from week to week, as long as the minimum 33% is met.
- Each reduced working arrangement must last for at least 7 calendar days.
- The employer must pay the employee their normal / contractual wages for all hours worked, (which will be a minimum of 33% of the employee’s usual working hours).
- For every “usual hour” the employee does not work, (67% of their working time, if the employee is only working 33% of their usual hours), the Government will pay 1/3 of the lost earnings, capped at £697.92 per month.
- For every “usual hour” the employee does not work, (67% of their working time, if the employee is only working 33% of their usual hours), the employer will pay 1/3 of the lost earnings. The employer contribution is not capped.
- This means that an employee who works the least amount of time possible under the scheme (33% of normal hours) will receive 77% of their normal earnings, where the Government contribution has not been capped. The employer would be responsible for paying 55% and the Government grant will fund the additional 22%.
- The maximum contribution made by the Government will be 22% of the employee’s lost earnings. The contributions are dictated by the cap and also by a “sliding scale” as follows:
|Hours Employee Worked||33%||40%||50%||60%||70%|
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% normal pay)||78%||80%||83%||87%||90%|
|Gov’t Grant (% normal pay)||22%||20%||17%||13%||10%|
|Employer Cost (% normal pay)||55%||60%||67%||73%||80%|
- When calculating “usual wages” or “usual hours”, the methodology will be the same as it was under the CJRS. If an employee previously benefited from the CJRS, the employer cannot use the wages received under the CJRS to calculate “usual wages” and must instead use the employee’s earnings prior to the CJRS i.e. their normal former contractual earnings.
- Employers are not expected to “top up” employees’ earnings above the JSS 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 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 1 November 2020, claims can be made via an online portal from December 2020. 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 5 days and earns £350 per week. Her employer is suffering from reduced sales due to Coronavirus. Rather than making Sarah redundant, the Company puts Sarah on the JSS. Under the scheme, Sarah works 2 days a week, 40% of her usual hours.
Sarah’s employer pays her £140 for the 2 days she works, but she is now losing out on 60% of her normal earnings, which equates to £210.
For the time she is not working (3 shifts / 60% of her lost earnings) her employer must pay her 1/3 of her lost earnings, which is an additional £70. The Government grant will also pay her 1/3 of her lost earnings, which is another sum of £70.
Under the scheme, Sarah works 40% of her usual hours, but receives 80% of her usual earnings, which is a total of £280 per week.
In response to the Government announcements on 9 and 12 October 2020, the JSS has been extended to include the “Lockdown JSS”, 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. “Lockdown JSS” is very similar to the original JSS, but differs in the following ways:
- Employees are not required to work a minimum of 33% of their usual hours to become eligible for the scheme, because as their workplace has been forced to close, they will be unable to work any hours.
- The Government will solely fund 67% of the employees’ usual wages, up to a maximum of £2,100 per month. The employer will not be expected to make a financial contribution to their employees’ earnings whilst the workplace is legally required to close. Employers will remain responsible for National Insurance and Pension Contributions, if applicable.
- Similar to the JSS, the period claimed for must be at least 7 calendar days, which means eligible employees must be off work for at least 7 calendar days.
It’s important to note that this extension of the JSS is only applicable for employers who have been forced to close their workplaces and who can no longer use the CJRS, because it ceases to operate from 1 November 2020 onwards. 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 JSS or the “Lockdown JSS”.
Last reviewed on 13 October 2020