Key features of the new Job Support Scheme

Two weeks before Rishi Sunak was due to launch a Job Support Scheme, he reinvented it announcing details of a new structure on 22nd October, with a significant increase in the levels of financial support provided by the government to businesses. Projected uptake of the original scheme was low. Employers struggled see the cost benefits of retaining under utilised staff while their businesses fought for survival.

The new schemes – JSS Open and JSS Closed, (the latter being for those businesses which have been required to close under lockdown regulations) are aimed at staff retention.

What is new about the schemes?

Under JSS Open, the minimum number of hours an employee needs to work to be eligible for support has been reduced to 20 per cent of their regular hours, down from 33 per cent under the original version of the scheme. The Employees will receive normal pay for the hours they work.

Alongside this, employees will be compensated by up to two thirds of their pay for hours which are not worked. Employers will only be required to provide 5 per cent of lost wages for the time employees are not working, compared to 33 per cent under the old scheme. The government is increasing its contribution to 62 per cent to compensate for the loss of wages, and has doubled its contribution cap to £1,541.75.

Employers must cover NI and pension contributions on the employee’s full salary.

The structure of the new scheme will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

Under JSS Closed the employee will receive two-thirds of their normal wages, funded by the government (with a cap biting against those who earn more than £3,125pm). The employer will have to pay the NI and pension contributions on that amount.

Employers will be able to top up employee wages above the level of minimum contributions at their own expense if they wish. This is another change; the first version of the JSS indicated government expectation was that employers would not top-up wages beyond the scheme.

Which employees are covered?

For the purposes of this scheme any individual who has been treated as an employee for Income Tax purposes can potentially qualify and it does not matter what sort of contract they were working under, be it full time, part time, zero hours or temporary.

The key is that they were on the PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them.

Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme (CJRS) to be eligible for the Job Support Scheme.

Unlike the CJRS scheme, employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period because the JSS is aimed at retention. It is unclear whether this covers employees serving notice for reasons other than redundancy.

Which employers can claim?

As with the old scheme, all SMEs (businesses with less than 250 staff on 23rd September) are eligible to apply regardless of which tier of lockdown restrictions they fall under.

Large employers will have to meet a financial assessment test, so the scheme will only be available to those whose turnover is lower now than before experiencing difficulties due to COVID-19. There is no financial assessment test for SMEs.

As with the CJRS, organisations whose staff costs are fully publicly funded should use that money to continue paying their staff, and not use the Job Support Scheme.

When does it start and how can employer’s claim?

The new Job Support Scheme opens on 1st November 2020, as before, and runs until 30 April 2021. The government will review the terms of the scheme in January.

The first claims can be made from 8 December 2020 via an online portal on GOV.UK, similar to the CJRS.

Do employees need to agree to be placed onto the Job Support Scheme?

As with any reduction in working hours, the employee is agreeing to a change in their terms and conditions of service. A change of this nature should be recorded in writing as a matter of practice. HMRC’s policy paper, however, confirms that this particular arrangement should be recorded in writing as a temporary work agreement which is retained and available for HMRC to view, on request, for a minimum of five years.

How does a business choose which employees to put on the scheme?

The HMRC policy paper specifies that when employers are making decisions on whom they should offer reduced hours to, equality and discrimination laws will apply in the usual way. Employers must make sure that the agreement is consistent with employment, equality and discrimination laws. In this way employers need to be careful not to select on the basis of assumptions around age, childcare commitments and disability, for example.

The temporary working agreement has to cover at least seven consecutive days. There is no reason why in a larger workforce, employers cannot circulate their employees on an off the scheme. In this way their staff could benefit from periods of time when they are working full time and earning their full salary and periods of time when they are not.

How do employers calculate the amount of pay due to their employees?

To calculate the amount of pay: 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 23 September 2020
• the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme

For those who receive variable pay, 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 1 February 2020 (or the employee’s start date if later) until 23 September 2020

There are complex rules to work out ‘normal hours’ in sections 5.2 and 5.3 of the policy paper. A Treasury Direction is expected to be issued soon.

Below is a link to the policy paper published by HMRC on 22nd October 2020 by HMRC  https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme