More information has now been published to the GOV.UK website regarding the Job Support Scheme (JSS). The new scheme will commence 1 November 2020, for a six month period, when the present furlough scheme ends.
A short summary of the key facts follows.
Who is eligible?
Conditions for employers:
• JSS in available to employers with a UK bank account and a UK PAYE scheme.
• The new scheme is available to employers or employees who did not use the furlough scheme.
• Large businesses will only be able to claim JSS support if they can demonstrate that their turnover is lower now than before experiencing COVID related disruption. A large business for HMRC’s operational purposes is usually defined as having more than 250 employees (this is reduced to 100 employees if company is foreign owned); or annualised turnover exceeding £30m.
• Large businesses using the JSS will be expected to make no capital distributions such as dividends or share buy backs.
• There will be no financial assessment test for smaller businesses (SMEs).
Conditions for employees:
• 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.
• In order to support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hour’s threshold.
• 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.
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. This means that employees working part-time will likely see a reduction in their take home pay. The Government contribution will be capped at £697.92 a month.
Unlike the furlough scheme, where funds were generally paid in time to cover wage payments to employees, grant payments under the JSS will be made in arrears, reimbursing the employer for the Government’s contribution.
JSS will be paid on a monthly basis but 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.
Employers will need to factor this into their cashflow forecasting. Companies will have to fund these payments for a number of weeks until their JSS claim is received.
What the JSS does not cover
The grant will not cover Class 1 employer NICs or pension contributions, and so these contributions will remain payable by the employer.
The government’s contribution will be limited to one-third of hours not worked and capped initially at £697.92 a month.
• “Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. 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 expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
• The employee must be working at least 33% of their usual hours. For the time worked, employees must be paid their normal contracted wage. For 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 grant for that employee.
Making JSS claims
The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through Gov.uk from December 2020.
HMRC will be checking claims
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.
Importantly, 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.
In a cryptic aside HMRC have confirmed their intention to inform employees of the full details of any JSS claim made on their behalf by employers.
The good news and the bad news
Clearly, any attempt at easing the cost of maintaining a workforce is to be applauded during this difficult time.
More cost is being transferred to the employer and cash flow will need to accommodate payments of JSS being made in arrears.
One intriguing consequence of the new grant (JSS) is that it is now more expensive for employers to retain three employees each working one-third of their normal hours than laying off two and retaining the third to work full time.
But at least we have a fairly realistic description of the new support offered. It is now back to the drawing board to figure how best to proceed. Please call if you are undecided which way to proceed. We can help.