The Chancellor of the Exchequer has announced changes to the Job Support Scheme, which will replace the CJRS furlough scheme with effect from 1 November. The scheme will now provide more support for businesses which remain open but experiencing considerable difficulty as a result of the coronavirus crisis and the restrictions in place.
Job Support Scheme: Job Support Scheme Open and Job Support Scheme Closed
Businesses that are operating but facing decreased demand will be able to get support for wages through the JSS Open (JSSO). 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 support through the JSS Closed (JSSC).
Under the JSSO:
- Employees must work at least 20% of their normal hours (rather than 33% as previously announced). Hours worked will be paid as normal by the employer;
- For the hours not worked the employee receives up to 66.67% of their normal pay:
- Government pays 61.67% up to a cap of £1541.75 per month
- The employer pays 5% plus NICs and minimum auto-enrolment pension contributions (reduced from 33% as previously announced) up to a cap of £125 per month. The employer can, but is not obliged to, top up above the 5% contribution.
- This means that employees who earn £3,125 per month or less will receive 73% of their normal wages.
There are no substantive changes to the JSSC. Where employees are unable to work for a week or more, under the JSSC:
- Government pays two-thirds of wages up to a cap of £2,083.33 per month
- Employers pay minimum auto-enrolment pension contributions and NICs only but can top up pay if they wish.
Calculation of pay is by reference to a reference salary made up of the same payments as under the CJRS. For fixed pay employees the reference salary is the greater of the wages payable in the last pay period ending on or before 23 September 2020 and the wages payable in the last pay period ending on or before 19 March 2020. For variable employees the reference salary is the greater of:
- the wages earned in the same calendar period in the tax year 2019 to 2020
- the average wages payable in the tax year 2019 to 2020
- the average wages payable from 1 February 2020 until 23 September 2020.
The calculation of usual hours uses the same reference periods.
Both schemes will come into effect on 1 November and run for 6 months until 30 April 2021. The Government will review the terms of the schemes in January. An employer can claim under both schemes in respect of different employees but not a single employee at the same time under both schemes.
In respect of both schemes, employers will be able to claim for employees who were on their PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. Employees do not need to have been furloughed under the CJRS in order to be eligible for the schemes.
Employees will be able to undertake voluntary training in non-working hours.
In respect of the JSSO only, large employers must pass a financial impact test demonstrating that their turnover has remained equal or fallen in order to be eligible. A large employer is a legal entity with 250 or more employees across their payrolls on 23 September 2020.
Employers who wish to access the JSSO or JSSC when the schemes start have just over a week to agree new short-time working or lay off arrangements with their employees. To be eligible employers must have reached written agreement with their employee (or written collective agreement with a recognised trade union). The employer must keep a written record of the agreement for 5 years and keep records of hours worked. The temporary working arrangement must cover at least 7 days.
Employers cannot claim under either scheme for an employee who has been made redundant or is serving a period of statutory or contractual notice during the claim period.
The Government ‘expects’ but does not require that large employers and their corporate groups using either scheme will not make capital distributions whilst claiming.
Grants under the schemes will only reimburse money already paid to the employees. Employers will be able to make their first claim from 8 December 2020.
The Treasury has published a factsheet which sets out the basic rules of the JSSO and a policy paper which provides more detailed guidance on both the JSSO and JSSC. More detailed guidance on the schemes is expected by the end of the month.