On the 22nd of October further guidance on the new Job Support Scheme (JSS) was finally released on gov.uk. As we mentioned in our previous post “What we know about the Job Support Scheme and Job Retention Bonus so far”, there were many details that were left to be clarified up until this point.
Whilst some details remain to be revealed, we now know that there will effectively be two schemes; JSS Open and JSS Closed. There are some similarities between the two, but it is important to note that they are different.
The JSS Open scheme is for employers who are able to remain open (meaning that they are not affected by closure, lockdown or restrictions and legally required to close down) but may be open with reduced hours or staff numbers.
Originally, the Chancellor advised that employees would have to work a minimum of 33% of their normal hours to qualify under the scheme, however it is now more generous.
The key details on the scheme are:
- Employees must work for a minimum of 20% of their usual hours
- Employers must pay the employees normal pay for the hours worked
- An employee will receive 66.7% of their normal pay for the hours not worked
- The employer pays only 5% of the salary for hours not worked, up to a maximum of £125
- The Government pays the remaining 61.67% of normal hours not worked, up to a maximum of £1,541.75
- Employees will receive at least 73% on earnings of less than £3,125 per month
- The scheme is open to employers with less than 250 employees as at the 23rd September 2020
- Employers with employees in excess of 250 must undertake a Financial Impact Test if they wish to claim through the scheme
- At least National Minimum Wage (NMW) must be paid for the hours worked
- As was the case with the previous Coronavirus Job Retention Scheme (CJRS) employers must reach a written agreement with employees that they have been offered a temporary working agreement
- The agreement must cover at least 7 consecutive days
The JSS Closed scheme is for employers that are legally required to close as instructed by the Government.
The key details of this scheme are:
- Each employee unable to work receives 67% of their normal pay
- This is paid by the employer, and the Government will refund this up to a maximum of £2,083.33
- The employer can choose to pay more, but this will be at their own cost and not eligible for refund
- Employers will not be eligible to claim under the closed scheme once the restrictions imposing closure are lifted and their business premises are legally allowed to open. These businesses would then claim, if their staff commence work on reduced hours, under the JSS Open scheme
- Employers must discuss the closure with their staff and notify the changes to the contract of employment to them in writing
- Work must cease for a minimum of 7 days
How are the schemes similar?
The schemes are similar in a number of ways. There is some eligibility criteria which applies to both of the schemes:
- Employers must be enrolled for PAYE online, which excludes those few employers who are allowed to submit payroll information to HMRC via paper form
- Employers must have a UK bank account
- Employees must be on the payroll between 6th April 2019 and 23rd September 2020 and have up to date RTI submissions made to HMRC notifying of payments made to those employees
- Employees who ceased to be employed after the 23rd of September 23020, but have subsequently been rehired will be eligible to qualify for either of the two schemes
- Employees can be on any kind of contract, including zero-hours contracts
- Employees do not need to have previously been furloughed under the CJRS
- The employer can choose to top up their employee’s wages at their own expense
- Employers will pay the employers National Insurance Contributions (NIC) and Pension contributions
- Employers cannot claim under both schemes on the same day
- Employers cannot claim for employees who have been made redundant, or are serving a contractual or statutory notice period
- Employees must be paid the full grant received by the employer as part of Gross Pay
What about employers in receipt of Public Funds?
For employers who have their staffing costs funded fully from the public purse, they will not be eligible to claim under either the JSS Open or the JSS Closed scheme.
Employers that rely on a combination of public and private funds to cover their staffing costs are advised to contact their sponsor departments or respective administration, for example the Department of Education. For those who are eligible they will claim using the same process and calculation.
How does the Financial Impact Test work?
As stated, employers with over 250 employees on their payroll will be required to undertake a Financial Impact Test to decide whether they will qualify to claim under the scheme.
For VAT registered businesses this test will be based on:
- For employers submitting quarterly VAT returns, the total sales figure on the VAT return filed and paid between the 31st August and 7th November 2929 will be compared with the same figure in the same quarter of 2019
- Monthly return employers will compare the 3 consecutive months filed and returned and paid by the 7th November 2020 with the same period of 2019
- Employers turnover remaining the same, or reducing compared to the previous year, will qualify to claim through the scheme
- The test only needs to be done once for the duration of the JSS
What do we know about how JSS claims will work?
We know that claims can be made from the 8th of December 2020 for November salaries, following a similar pattern for subsequent months. April claims (which will be the final month of the scheme) will need to be made in May. HMRC will check the claims, as they have done for CJRS, looking for fraudulent and incorrect claims.
Employers claiming the JSS are also able to claim via the Job Retention Bonus (JRB) scheme if they are eligible to receive the bonus.
What do we know about JSS calculations?
So far guidance has only been released on the open scheme, guidance for the closed scheme is expected to be released by the end of October.
- Claims can be made up to a maximum of £1,541.75 per employee per month, depending on the number of hours worked
- The reference salary is made up of ‘regular’ payments that employers are obliged to make
- This includes regular wages, overtime (non-discretionary), fees, commission payments and piece rate work
Calculations cannot include:
- Payments made where the employer has no obligation to make the payments
- Tips, including payments made through a Tronc
- Discretionary bonuses
- Discretionary commission payments
- Non-cash payments
- Benefits in kind
For fixed-rate employees, the reference salary is the greater of wages payable in the last period on or before 23rd September 2020, or wages payable on the RTI submission made on or before 19th March 2020.
For variably paid employees the reference salary is the greater of:
- Wages earned in the same calendar month in the tax year 2019/2020
- Average wages payable in the tax year 2019/2020
- Average wages payable from 1st February 2020 (or the employee’s start date if later) until 23rd September 2020
Establishing usual hours
As was the case with the CJRS, the JSS Open and Closed schemes require the establishment of employee’s usual hours.
For employees with fixed hours, the calculation is based on the greater of:
- Hours the employee was contracted to work for at the end of the last full month before 23rd September 2020
- Hours the employee was contracted to work for in the last full period on or before 19th March 2020
For employees who work variable hours, the usual hours are calculated as the greater of:
- The number of hours worked in the same calendar period in the tax year 2019/2020
- The average number of hours worked in the tax year 2019/2020
- The average number of hours worked from 1st February 2020 (or the employee’s start date if later) until 23rd September 2020
The calculation must include hours paid as annual and statutory leave, and cannot be altered if the employee is expecting to work more or fewer hours in the future.
For employees on flexible work time arrangements, we should not count as ‘hours worked’ any hours that the employee worked but was not paid as they accrued paid time off. We should also not count ‘hours worked’ as any hours that the employee took as paid time off which they have accrued by working additional hours at some other time.
For employees who are paid on ‘piece work’ or ‘per task’ whose hours cannot be calculated this way, hours can be estimated based on the number of ‘pieces’ produced and the average rate of work per hour.
Guidance expected at the end of October
Further guidance was expected at the end of the month which will hopefully clarify the remaining questions including:
- The calculation basis for the JSS Closed reference salary and usual hours
- The precise format for claim submission to HMRC
- The interaction between the schemes if employers are able to reopen legally, and how the claims procedure will progress in this instance
As soon as we have further details we will share what we know. It is all getting very close to the claim date, however and it is disappointing that there is still no clarity on some of the necessary claim processes. It feels like CJRS all over again!