Job Support Scheme introduced to support UK businesses

In a further attempt to reduce the impact of COVID-19 on the economy, businesses and jobs, the Chancellor announced details of the Job Support Scheme (JSS) on 24 September 2020.

As the Job Retention Scheme (JRS) comes to an end on 31 October, JSS takes over to support those businesses still operating with reduced demand. Available from 1 November for six months, it’s designed to protect viable jobs throughout winter.

ONS stats produced mid-September showed that 10% of the UK workforce remained on furlough leave. The JSS works very differently to the JRS. It appears to be designed to drive that 10% back to work in some capacity, and protect jobs that might otherwise be at risk from demand falling. The scheme is aimed at small and medium-sized businesses with larger businesses subject to a financial assessment test to demonstrate they require Government funding support. The expectation is that large employers will not be making capital distributions to their shareholders whilst accessing the scheme.

When originally announced in September, the JSS saw employers paying a third of their employees’ wages for hours not worked, and required employers to be working 33% of their normal hours.

On 22 October 2020, the Government reduced the employer contribution to those unworked hours to just 5%, and reduces the minimum hours requirements to 20%, so those working just one day a week will be eligible. That means that if someone was being paid £587 for their unworked hours, the government would be contributing £543 and their employer only £44.

Employers will continue to receive the £1,000 Job Retention Bonus. The Job Support Scheme Closed for businesses legally required to close remains unchanged.

The JSS starts to operate from 1 November and covers all Nations of the UK. For every hour not worked, the employee will be paid up to two-thirds of their usual salary.

The government will provide up to 61.67% of wages for hours not worked, up to £1,541.75 per month (more than doubling the maximum payment of £697.92 under the previous rules). The cap is set above-median earnings for employees in August at a reference salary of £3,125 per month.

Example: a typical full-time employee in the hospitality industry is paid an average of £1,100 per month. Under the Jobs Support Scheme for open businesses, they will still take home at least £807 a month. All the employer needs to pay is a total of £283 a month or just £70 a week; the government will pay the rest.

Employers using the scheme will also be able to claim the Job Retention Bonus (JRB) for each employee that meets the eligibility criteria of the JRB. This is worth £1,000 per employee. Taking JSS-Open and JRB together, an employer could receive over 95% of the total wage costs of their employees if they are retained until February.

The JSS will not cover NIC or pension contributions; these remain payable by the employer. Employers must pay their contracted wages for the hours worked. The expectation is that employers will not be able to top up their employees’ wages above the two-thirds. Mainly because that would almost prove they can afford the full wage and, therefore, probably could make do if the employee were working full time. 

Another difference between JRS and JSS is that employees cannot be made redundant nor put on notice of redundancy during the period within which their employer is claiming the grant for that employee. Employers must agree on the new working arrangement with the employee and amend contracts accordingly. 

Eligibility criteria for the scheme:

  • Businesses must be experiencing lower demand and therefore, a reduction in revenue to apply. Larger businesses will be subject to a financial assessment. 
  • The employee must be working at least 20% of their usual working hours. Government support in calculating usual working hours can be read here.
  • The employer must pay the employee their usual wage for the hours worked and 5% of the hours not worked. Government support in calculating usual wage can be found here.
  • Employers must have a UK bank account and a PAYE scheme. Employees must have been on the PAYE scheme on or before 23 September 2020.
  • Like the latter part of the JRS, employers can add and remove employees from the scheme as demand dictates, but each short-time working arrangement must be for a minimum of 7 days. 
  • Grant payments will be paid in arrears with claims only being submitted in respect of a given pay period. The employee must have been paid, and the payment reported to HMRC via an RTI return.
  • Businesses required to close as a result of specific workplace outbreaks by local public health authorities are not eligible for this scheme.

There is a known issue at HMRC with regards to their systems not recognising the Employment Allowance. Where employers are due the allowance, HMRC’s systems are not allocating the Employment Allowance credit over to the employers’ PAYE/NIC accounts. This is automatically generating underpayment notices to employers. HMRC have told us that they hope to have this resolved by 31 October. Please liaise with our payroll team should you receive such a notice.

Need more information, help or advice?

This article was written by Matthew Hector Business Development Manager for Price Bailey. For further support and information regarding the implications to payroll, please contact Stuart Curtis; and for HR or legal support regarding the scheme, short-term working arrangements or contract amendments, please contact Heidi Berry.

 

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

 

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