On Thursday 22 October 2020, HMRC released further details regarding the Job Support Schemes (JSS) that comes into place on 1 November 2020 when the current furlough scheme ends. HMRC have stated that they will be providing further details and clarifications at the end of October, but we have provided below details as they stand at the moment.
The two schemes are now called JSS Open and JSS Closed.
JSS Open can be accessed by businesses that are operating but facing decreased demand and, therefore, cannot keep employees fully employed.
JSS Closed can be accessed by businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by one of the four UK Governments.
There is a degree of flexibility as, for example, the schemes can run alongside each other for a business that has some premises closed, due to a legal local lockdown restriction in one area, and some remaining open, but with decreased demand, in a different area.
Both JSSs will be open from 1 November 2020 and run for 6 months, until 30 April 2021. The Government will review the terms of the scheme in January 2021. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved. Neither the employer nor the employee needs to have previously benefitted from the CJRS furlough scheme to be eligible for the JSS.
Who is eligible to claim the JSS
Employers will be able to access the JSS if:
- they have enrolled for PAYE online and have a UK, Channel Island or Isle of Man bank account
- Must have been on PAYE payroll between 6 April 2019 and 23 September 2020, and been included on an RTI return notifying HMRC of payment of wages at some point during that period.
- Must have been an active employee on 23 September 2020.
- Cannot be made redundant or be serving a contractual or statutory notice period during the claim period.
For JSS Open:
- Some, or all, of the employees must be working reduced hours – employees must still be working for at least 20% of their usual hours which are paid by the employer. Employers cannot claim for employees’ wages for any time they spend working.
- The employee will receive 66.67% of their normal pay for the hours not worked
- The pay for hours not worked will be funded 5% by the employer, up to a maximum of £125 per month, and 61.7% by the government, up to a maximum of £1,541.75 per month, depending on the number of hours worked.
- The employee has a pay reduction of one third of the hours not worked, although the employer has the discretion to “top up” if they wish.
- Employers must have reached written agreement with the employee regarding the temporary working agreement for the reduced hours, and that agreement must be in place for at least 7 consecutive days.
- Claims are valid from the later of the date that the employee starts working reduced hours or the date when working reduced hours is confirmed in writing, not when the decision is made.
- If an employer is a “large business”, with 250 or more employees on 23 September 2020, they must undertake a complex Financial Impact Test to demonstrate that their turnover has remained equal or fallen compared to the previous year to show they have been adversely affected due to coronavirus; an employer with less than 250 employees on 23 September 2020 is not required to satisfy the test. The expectation is that large employers (250 or more employees), and their corporate groups, using the scheme will not make capital distributions whilst claiming the Job Support Scheme grant.
For JSS Closed:
- Business premises at one or more locations must be legally required to close as a direct result of Covid-19 restrictions set by one or more of the four Governments of the UK. This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/or drink outdoors.
- Businesses premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for this scheme.
- Employers are only eligible to claim for periods during which the relevant Covid-19 restrictions are in place. When restrictions are lifted, and the business premises is legally allowed to reopen, JSS Open can be claimed if the eligibility criteria are met.
- The employee’s primary work place must be the premises that have been legally required to close.
- The close down must be for a minimum period of at least 7 consecutive calendar days.
How to calculate the JSS Open
Further details of calculations employers need to do to work out their claim will be made available in guidance due to be published at the end of October 2020. The information published to date is as follows:
Reference salary for JSS Open
- Reference salary is capped at £3,125 per calendar month. Employees’ reference salary includes regular payments they are contractually due, including: regular wages; non-discretionary payments for hours worked, including overtime; non-discretionary fees; non-discretionary commission payments; piece rate payments. (As per CJRS)
- 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 employees whose pay is variable the Reference Salary is the greater of:
- the wages earned in the same calendar period in the 2019/20 tax year
- the average wages payable in the 2019/20 tax year
- the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020
Calculating JSS hours for employees with fixed working hours
- Usual hours are calculated based upon the greater of:
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention scheme (NB. if employees moved to part time working, this may change in guidance to be issued at the end of October)
- Hours of work should include hours paid as annual leave and statutory leave.
To calculate normal working hours for an employee working set contracted hours per week Mon- Fri, paid monthly:
- Take the greater of the number of hours contracted for at the end of the last pay period before 23 September 2020 and the number of hours contracted for at the end of the last pay period before 19 March 2020 (as detailed above)
- Divide by the number of calendar days in the repeating working pattern, including non-working days (usually 7 days)
- Multiply by the number of calendar days which the employee is eligible to be claimed for under JSS Open
- Confirm the percentage of hours worked is more than 20%
Calculating JSS hours for employees with variable working hours or whose pay depends on the number of hours they work
The number of usual hours is calculated based on the higher of:
- The number of hours worked in the same calendar period in the 2019/20 tax year
- The average number of hours worked in the 2019/20 tax year for the pay period
- The average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020 for a pay period
- Hours of work should include hours paid as annual leave and statutory leave.
- The calculation of usual hours is not and cannot be altered if the employee is expecting to work more or fewer hours than this in the future.
Payments to employees
The employee must receive full salary paid by the employer for the hours worked.
To calculate the amount to be paid to the employee for non-working hours:
- Start with the reference salary for the pay period, capped at £3,125 per month (pro rata for part time employees)
- Divide by the number of calendar days in the pay period
- Multiply by the number of calendar days subject to a Temporary Working Agreement (reduced hours)in the pay period
- Divide by the number of usual hours for the JSS Open days in the pay period
- Multiply by the number of non-working hours for the JSS Open days
- Multiply by 66.67% – (5% funded by employer and 61.67% can be claimed from the government)
Making a claim
Employers will be able make their first claim from 8 December 2020 on GOV.UK. for salary pay periods ending and paid in November. Subsequent months will follow a similar pattern, with the final claims for April being made from early May.
The employer can claim 61.67% of the wages paid for contractual hours not worked, subject to a a maximum cap of £1,541.75 per month, on a maximum reference salary of £3,125 per month, depending on the hours of work.
The employer must meet the cost of all employer NIC and pension costs in the pay period for payments relating to both the worked hours and the hours not worked.
More detail about the process of claiming will be published in guidance by the end of October 2020.
How to calculate the JSS Closed
- The monthly cap for government funding for 2/3 of normal pay is £2,083.33 per month
- The employer can choose to top up wages above this
- Details and guidance on how to calculate JSS Closed will be published at the end of October.
Employer requirements for JSS Open and JSS Closed
- Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made.
- Employers cannot enter into any arrangement with the employee which would reduce wages below the amount claimed (for example a salary sacrifice scheme). Deductions from net pay, cannot be deducted if they are in connection with the employment.
- Employers are required to meet the cost of Employers NIC and employer pension contributions on all wages paid to the employee under the JSS schemes.
- PAYE tax/NIC must be deducted from all wages paid, whether by the employer funded or funded by the Government under the JSS. PAYE tax/NIC remittances must be paid to HMRC under RTI each month in the normal way.
- If applicable, Student Loan deductions and the Apprenticeship Levy must also still be paid.
- Employees can do training in working hours while being claimed for under the Job Support Scheme. Hours that employees spend training at the request of the employer must be paid at the full rate of pay and will count towards 20% of their usual working hours. Employees are entitled to the National Living Wage/ National Minimum Wage/or Apprentices Minimum Wage as appropriate for the hours they are working or treated as working (such as training undertaken at the request of the employer in non-working hours) under minimum wage rules. For JSS Open, at least minimum wage rates must be paid for all hours worked or treated as worked.
Record keeping and HMRC review for JSS Open and JSS Closed
- Every time employees’ working patterns are changed, employers must maintain records relating to the contractual terms of the temporary working agreements for each employee
- In both schemes, the new contractual working patterns must be in place for a minimum of 7 days
- Make sure that the agreement is consistent with employment, equality and discrimination laws
- Keep records of how many hours employees work and the number of usual hours they are not working
- Agreements must be made available to HMRC on request
- Records must be retained for 5 years for HMRC inspection
- HMRC will check claims and payments may be withheld if HMRC suspects a claim to be ineligible
- The amount of any overpayment by the employer must be paid back to HMRC where a claim contains incorrect information
- The full amount of any grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount overclaimed may be applied where appropriate. HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect Job Support Scheme grant claim.
Interactions with other support schemes
Employers claiming the JSS may still claim the Job Retention Bonus in respect of the same employee if they are eligible. Grants claimed under the JSS can be used by employers to pay an employee’s wages and help meet the Lower Earnings Limit of the Job Retention Bonus.
If you have any questions or concerns regarding the scheme, or any other employment tax issues, please do not hesitate to get in touch.