CHANGES TO THE JOB SUPPORT SCHEME – FURTHER HELP FOR EMPLOYERS
CHANGES TO THE JOB SUPPORT SCHEME – FURTHER HELP FOR EMPLOYERS

26 October 2020

On 22 October, Chancellor Rishi Sunak announced a further amendment to the Job Support Scheme (JSS), originally announced on 24 September, and due to begin on 1 November 2020. The JSS replaces the Coronavirus Job Retention Scheme (CJRS) more commonly referred to as furlough but is not as generous because there are several conditions employers need to meet in order to claim.

JSS has been criticised for a number of reasons including failing to adequately assist those in tier two or three areas as well as those businesses operating in the hospitality and the leisure sector where the requirement for employees to work at least a third of their hours did not go far enough, especially given the restraints required by the rest of the coronavirus legislation.

In response the Chancellor has created “JSS Open” for businesses that remain open with reduced demand and “JSS Closed” for businesses that will have to close entirely. The enhanced support reflects the impact of the new set of restrictions as well as the government’s desire to continue to support viable businesses whilst preventing large-scale redundancies.

JSS Open scheme

Employees benefiting from JSS Open will receive at least 73% of their normal pay, capped at £3,125 a month. The minimum number of hours employees must work has been reduced from 33% to 20%, for which employers must pay salary as normal. Meanwhile the amount the employer must contribute in wages for unworked hours is reduced from 33% to 5% (capped at £125 per month). This makes the government contribution 61.67% of pay for hours not worked, although capped £1,541.75 (increased from £697.92 previously announced).

Financial impact test for large employers

JSS Open is available to any employers with eligible employees, a UK bank account and a UK PAYE scheme. However, “large employers” need to meet a financial impact test demonstrating their income has stayed flat or been adversely affected by coronavirus. SMEs will not have to meet any financial test. A “large employer” will be those with more than 250 employees on their payroll and they will be required to show their turnover has remained equal or fallen compared to the previous year.

JSS Closed

JSS Closed is for those businesses who are required to close and who’s employees cannot work at all for the employer. Under JSS Closed an employee who cannot work due to the coronavirus restrictions imposed will receive 66.67% of their normal pay.

This will be paid by the employer and fully funded by the government, to a maximum of £2,083.33 per month, although an employer has discretion to pay more than this if they wish.

JSS grants count toward the Job Retention Bonus

Employers can still claim £1,000 bonus for bringing a furloughed employee back to work in addition to claiming ongoing support for that employee under the JSS. To qualify for the bonus, the employee would need to remain continuously employed to the end of January 2021 and earn a minimum of £1,560 (gross) between 6 November and 5 February 2021. The grant can count towards that minimum income threshold.

Employers can claim under both schemes for different employees

Employers can claim under both JSS Open and JSS Closed at the same time, but not in relation to the same employees. Thus, if one part of an employer’s business is compulsorily closed because of the coronavirus but the other part is not both schemes can apply.

Key Points

Other key points to note are set out below:

  • the Scheme will run from 1 November 2020 to 30 April 2021;
  • it will be open to employers regardless of whether they used the CJRS or furlough previously;
  • employees must have been employed as at 23 September in order to be eligible; and
  • the employee must keep their job and cannot be made redundant or given notice of redundancy while their employer is claiming a grant.

So what should employers do?

It is important now to review the scheme in detail and consider whether and how it applies to you.  The guidance itself makes clear that there will be further guidance available “at the end of October 2020”. Given how much of a departure has been made on 22 October from the scheme as envisaged on 24 September employers need to keep on top of these changes.

To be eligible for the grant, employers must have reached written agreement with their employee (or, if unionised, reached written collective agreement with a trade union) that they have been instructed to and agree to stop working for a minimum of 7 consecutive calendar days. A copy must be maintained by the employer for five years and be made available to HMRC on request. Full guidance on what to include has not been published yet, but employers need to consider working out what will assist their business’s survival now.

Employers should bear in mind that an employee cannot be made redundant once their employer is claiming a grant. It is not yet clear as to whether employers will need to stop claiming any grants if they need to enter into redundancy consultations or whether they will be required to repay any grants they have received in full. Employers who have already commenced redundancy consultation will therefore need to consider whether to continue with redundancy consultation or whether this should be paused.

Please note that the guidance for the scheme is regularly changing and we therefore recommend that you double check the position with us before taking any action.

For further information, please contact our Jacqueline Kendal, Gill Brown or Jack Gardener, in our Employment team.

Call Jacqueline on 01256 854626 or email [email protected]

Call Gill on 01256 854605 or email [email protected]

Call Jack on 01256 854665 or email [email protected]

Alternatively click here to go to our contact page.

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