On 24 September 2020, the Chancellor, Rishi Sunak, set out the Government's new Job Support Scheme (JSS) in a statement to the House of Commons.
The JSS will begin on 1 November 2020 following the closure of the Coronavirus Job Retention Scheme (CJRS) on 31 October and subsidises the wages of employees working at least a third of their normal hours.
The new JSS is focused on preserving 'viable jobs'. For employers the JSS is less generous than the CJRS. In October employers may claim a CJRS grant for up to 60% of an employee's normal wages, but under the JSS, grants will only be up to 22% of an employee's normal wages. As for employees, they will receive 77% of their gross salary for doing a third of their normal hours. For many that will translate into well over 80% of their net pay.
In the hours that followed the announcement, more details of the new scheme have emerged following HM Treasury's publication of its Winter Economy Plan Policy Paper covering a number of new or revised Government initiatives, including the JSS and the Job Support Scheme Factsheet.
On 9 October, the Chancellor announced that the JSS is being expanded to support businesses required to close their premises due to coronavirus restrictions. For those businesses, the JSS grant will cover up to two thirds of employees' salaries, subject to a cap. While we await the much-needed full detail of the JSS requirements generally, in relation to the expansion, The Job Support Scheme Expansion for Closed Business Premises Factsheet provides some additional information.
Here we take a look at what we know about the JSS so far and what we have yet to learn.
The New Job Support Scheme Q&A
1. What is the aim of the JSS?
The JSS is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to COVID-19. It focuses support on businesses "that are being impacted by Coronavirus and who can support their employees doing some work, but that need more time for demand to recover.
See below for the JSS Closed Business Premises Expansion ('JSS Expansion').
2. When will the JSS run?
The JSS will open on 1 November 2020 and run for 6 months, until April 2021, subject to review in January 2021..
3. What does the JSS provide?
Basically, the JSS can be used to bolster the pay of employees working reduced hours:
- Where eligible employees work at least one third* of their normal hours and are paid by their employer for those hours then,
- The Government and employer together will make up the pay to two-thirds of normal hours, with the Government and the employer each paying one third of the remaining unworked hours (subject to a cap on the Government contribution - see below).
According to the HM Treasury infographic this means the employee works 33% of normal hours and receives 77% of pay, 55% funded directly by the employer (33% + 22%) and 22% funded by the Government (via the employer) - those mathematically inclined will note HM Treasury has done some selective rounding down.
*The JSS Factsheet includes an important caveat. While the JSS is to run for 6 months, the requirement that the employee must work at least 33% of their usual hours will be reviewed by Government who may increase this minimum hours threshold 3 months into the running of the JSS.
4. Is there a cap on the Government's contribution
Yes. As set out in the headlines, employees will need to work a minimum of 33% of their usual hours. For every hour not worked the employer and the Government will each pay one third of the employee's unworked hours. However the Government's contribution will be capped at £697.92 per month. Accordingly, where the Government contribution has been capped the employee may receive less than 77% of their normal pay.
5. Can employees work more than a third of their normal hours?
Yes. If employees work more than a third of their normal hours the JSS grant amount will be reduced as the unworked hours to which the grant can be claimed will be reduced. The Treasury Factsheet provides the illustrative example of:
|Hours Employee Worked
|Hours Employee Not Working
|Employee Earnings (% of normal)
|Gov't Grant (% of normal wages)
|Employer Cost (% normal wages)
6. Is use of the JSS linked in any way to the CJRS?
No. Eligibility for employers is not dependent upon having previously used the CJRS.
If the employer has used the CJRS, they can still use the new JSS (including the expansion) and will still be able to claim the Jobs Retention Bonus in respect of those previously furloughed employees who are retained until at least 31 January 2021.
7. Which employers are eligible?
All employers with a UK bank account and UK PAYE schemes can claim the JSS grant.
All small and medium employers will be eligible without any financial assessment test.
Large employers will only be eligible where their turnover has fallen through the COVID-19 crisis. Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from COVID-19.
Further guidance is promised on what the financial assessment test will entail for large employers. However, the JSS Factsheet states that the Government expects that large employers will not be making capital distributions, such as dividends or share buybacks if using the JSS.
We also await detail of how small, medium (SME) and large employers will be defined for the purposes of the JSS. If the definition is based on that in the Companies Act 2006, then (broadly) a company would be a SME if it meets at least two of the following requirements:
- Annual turnover of £36 million or below;
- Balance sheet total of £18 million or below; or
- 250 or fewer employees.
8. Which employees are eligible?
Employees must be on an employer's PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.
Employees must be on reduced hours (see below).
Employees will be able to cycle on and off 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 days.
Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee. This is an important difference to the CJRS.
Note: the Treasury Factsheet uses the term 'employees'. At this stage it is unclear whether 'employees' is used as defined in the Employment Rights Act 1996 or whether it is intended to include the wider class of 'workers'. It is highly likely to be the latter which is used under the CJRS.
9. What does it mean to be on reduced hours?
The employee must be working at least 33% of their usual hours - to be reviewed by Government who may increase this minimum hours threshold 3 months into the running of the JSS.
Note: HM Treasury use the terms 'normal hours' and 'usual hours' interchangeably.
10. What does the grant cover?
For every hour not worked by the employee, both the Government and employer will pay a third each of the 'usual hourly wage' for that employee, subject to the Government contribution cap of £697.92 a month.
The JSS grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer
11. What are 'usual wages'
The JSS Factsheet states the 'usual wages' calculations will follow a similar methodology as for the CJRS. Full details to be provided in future guidance. 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.
What remains unclear at this time, is what will be the reference point for 'usual wages'. The CJRS used pay based on a 19 March 2020 reference date. But the eligibility date for the JSS is 23 September 2020. What is the position where the employer and employee have agreed a more permanent contractual change in working hours since 19 March, intended to endure beyond the employee's furlough arrangements or where an employer did not utilise the CJRS? Presumably it will be the contractual hours/wage in effect at the time the grant is claimed in that scenario rather than contractual wages/hours which applied back in March. Hopefully further guidance will address this issue.
12. Can employers claiming the JSS grant top-up employee wages?
Unclear. Unlike the CJRS, the JSS Factsheet states the Government "expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense". However, this may be a typo as the later JSS Expansion Factsheet states "employers can top up employee pay if they wish".
13. What about those on leave?
Will and if so how the JSS will apply in relation to those on maternity and other forms of family related leave or sick leave/self-isolating is simply unanswered.
It is also unclear whether the JSS can be claimed for employees who take holiday leave. Until further guidance is available, it is simply unknown whether holiday leave will count towards the 33% minimum working hours' requirement. If holiday is taken, employers may need to top up holiday pay in some cases.
14. Can the JSS grant be claimed before paying over the employees' wages?
No. The employer will be reimbursed in arrears for the Government contribution.
This a key difference to the CJRS and will be an important cash flow concern for employers.
15. How can an employer claim?
Employers will be able to make a claim online through Gov.uk from December 2020.
Grants 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.
16. Will HMRC run checks?
Yes. 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.
As was required under the CJRS, employers must agree 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 intend to publish the name of employers who use the JSS including the expansion.
Unlike the CJRS, employees will be informed by HMRC directly of full details of the claim.
17. What is the JSS Closed Business Expansion ('JSS Expansion')?
The JSS Expansion provides temporary support to businesses whose premises have been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK. It will support the wage costs of employees who have been instructed to and cease work in eligible premises.
As for the JSS generally, the JSS Expansion is to be available to employers for six months, from 1 November 2020 and subject to a review in January 2021.
18. Who is eligible to claim under the JSS Expansion?
Subject to the general eligibility requirements set out in 7 and 8 above, the JSS Expansion will cover businesses that, as a result of restrictions set by one or more of the four Governments in the UK, are legally required to close their premises. This includes premises restricted to delivery or collection only services from their premises.
It is important to note that businesses required to close as a result of specific workplace outbreaks by local public health authorities are not eligible under the JSS Expansion.
It is unclear whether large businesses will have to meet a financial assessment test where the circumstances for eligibility under the JSS Expansion apply (see 7 above). The JSS Expansion Factsheet does not mention any 'financial assessment test' requirement, though it does refer to the Government's "expectation" that large employers using the JSS Expansion will not be making capital distributions, such as dividend payments or share buybacks whilst accessing the grant.
19. Which employees can be claimed for under the JSS Expansion?
In addition to the general JSS eligibility requirements set out in 8 above, employees must be instructed to and cease work for a minimum of seven consecutive days. Note: the JSS Expansion Factsheet refers to the" 'Employer must be instructed to cease work for a minimum of seven consecutive (or calendar) days". This is presumably a typo (employer should be employee) as the Chancellor's announcement states "Businesses will only be eligible to claim the grant while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days".
20. What does the grant cover under the JSS Expansion?
Under the JSS expansion, a grant will be paid to an eligible employer calculated on the number of eligible employees who have been instructed to and cease work at the relevant premises. Employers will only be able to use the scheme for employees who cannot work (paid or unpaid) for that employer.
Where employees receive two-thirds of their wages for time not worked, the grant per eligible employee available from the UK Government is two-thirds of their normal pay up subject ot a cap. Further detail on how normal pay is calculated will be set out in guidance.
The employer must use the whole of the grant monies to cover their employees' wages and pay relevant payroll taxes.
As is the case for all payments under the JSS, claims must be made monthly in arrears. These payments will be taxable, and employers will be required to cover employer NICS and automatic enrolment pension contributions in full, where applicable, but are not required to make further contribution to wage costs.
21. Is there a cap on the Government's contribution under the JSS Extension?
Yes, the grant per eligible employee available from the UK Government of up to two-thirds of their normal pay, is subject to a limit of £2,100 per month.
22. Can employees take another job while paid by an employer using JSS Expansion?
The JSS Extension Factsheet simply does not answer this. Subject to more detailed guidance being issued, it is likely that working elsewhere while the employee's employer is required to be closed but paying partial wages utilising the JSS will be permissible as it was under the CJRS.
We will provide a further update once more much-needed further detail is available.