As mentioned in our previous blog entry, the Chancellor has provided some amendments to the initial Job Support Scheme (‘JSS’) announced on 24th September 2020. This is in line with the regional reported increases in COVID-19 infections across the UK and is a responsive measure to the adoption of the recently implemented three tiered restrictions.
Overview of September’s initial announcement
Originally JSS intended to support people who are in work so they continue on shorter hours rather than being made redundant.
It applied to employees working a minimum of 33% of their usual hours. For the remaining hours not worked, the government and the employer would pay one third each. This means employees working 33% of their hours would receive at least 77% of their pay.
The level of grant would then be calculated based on employee’s usual salary, capped at £697.92 per month.
However, on 22nd October 2020, Chancellor Rishi Sunak announced new support rates, alongside revealing an additional two contemporary support measures.
The main overall change is the employer’s contribution to wage costs under the JSS for those not working being been cut from 33% to 5%, with business based in all alert levels eligible. This was a welcome change, and make the scheme more beneficial for businesses in general.
But the additional measures announced will essentially affect the following:
- Businesses that have to close due to lock down measures.
- Businesses that remain open but are adversely affected by tier two restrictions.
The Government state the JSS Schemes will:
“Provide different types of support to these businesses so they can get the right assistance, at the right time, according to their situation. Businesses that are operating but facing decreased demand can get support for wages through JSS Open. Those businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK can get the support they need through JSS Closed.”
So, what is meant by JSS Open and JSS Closed, and what do the new measures mean for you as an employer? How does your business qualify?
JSS Closed — Criteria
JSS Closed is the more generous of the two incentives but can only be used by businesses which are required to close by the coronavirus regulations, such as those firms subject to tier 3 restrictions.
It is worth noting that premises restricted to delivery or collection services, or to serving food outdoors, count as ‘closed’ if located in a restricted area.
JSS Closed — Specifics
Under this Scheme the grant will cover for two-thirds of the normal pay of furloughed employees, up to a maximum of £2,083.33p per month.
The employee must surrender one-third of their wages, and will have to agree to that change in their employment contract in writing if they are not presently working under a zero hours contract.
JSS Open — Criteria
JSS Open can be adopted by all other small and medium sized businesses if some or all of their employees are working reduced hours.
Large companies — classified as firms with 250 employees plus as of 23 September 2020 — wanting to utilise JSS Open, must also prove that their trade has been negatively affected by COVID-19. The Government will do this by reviewing VAT Returns filed between 31st August 2020 and 7th November 2020 to confirm decreased income.
The Government additionally expects that such firms and their corporate groups adopting this Scheme will not make capital distributions whilst claiming the grant.
This includes the payment of:
- dividend, charges, free or other distribution;
- any equivalent payment that a partnership may make to its partners.
JSS Open — Specifics
Under this Scheme an employee must work at least 20% of their usual working hours; 1-day of a normal 5-day working week. Please note to ensure the reduction in hours is agreed in writing with your employee(s). This agreement must be adhered to as HM Revenue & Customs can review any claims at a later date.
Employees can engage in training activities in working hours while being claimed for under the Job Support Scheme. Hours spent in training are paid for by the employer at their full rate of pay and will count towards 20% of their usual hours.
Key points:
- The employer must pay for all of the worked hours at an employee’s salary (agreed in writing), plus up to 5% of the value of the hours not worked (up to £125 per month).
- The employer can top-up this figure if they wish to. Claims are subject to a maximum reference salary of £3,125 per calendar month.
- Employers can claim for Government support for their employees’ wages (including those on National Minimum Wage) up to a maximum of £1,541.75p per month, depending on how many hours they work
- The employer must pay all of the employer’s National Insurance (NIC) on all of the wages the employee receives plus any employer’s minimum contribution to a workplace pension.
What will the employee receive?
An employee who works for 20% of their contracted hours will receive:
- 4% (5% x 80%) of pay for non-worked time, capped at £125 per month.
- 20% of worked time.
- 33 of pay (61.66% x 80%) for non-worked time, capped at £1,541.75p per month.
In summary the employee receives 73.33% of their pay whilst foregoing 26.67% of their normal pay.
How do I make a claim?
Employers will be able to claim under either the Open or Closed Job Support Scheme from 8 December 2020, although the first claim period cannot start before 1 November 2020.
Employers will be able to access these Job Support Schemes if they meet the following criteria:
- They have enrolled for PAYE online.
- They have a UK, Channel Island or Isle of Man bank account.
Claims will be made under the same portal as previous furlough claims.
Additional points to consider:
Redundancy
Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
Fraudulent Claims
HM Revenue & Customs will check claims, and payments maybe withheld if HM Revenue & Customs suspect a claim to be ineligible.
The amount of any overpayment must be paid back to HM Revenue & Customs by the employer for a claim containing 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 apply where appropriate. HM Revenue & Customs will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect Job Support Scheme grant claim.
Transparency
HM Revenue & Customs will publish the names of the employers which utilise either JSS Open or JSS Closed.
This enable employees to be able to check if their employer has made a JSS claim relating to them via their personal tax account. This feature is designed to prevent employers from claiming JSS while also asking employees to work.
For a detailed breakdown of the points raised in this blog entry please visit: –
https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme
There will no doubt be more detail released in the coming weeks, so please feel free to speak to a member of the White Hart Associates team should you require any guidance or clarification.
