On September 21, the government announced its Job Support Scheme as part of the Winter Economy Plan to help businesses survive in current months.
The current CJRS, known as furlough, will close as planned on October 31. With plans to extend state support until May 2021, the Chancellor Rishi Sunak announced his new six-month furlough replacement, the Job Support Scheme (JSS) in which the government and firms will continue to top up wages to help support “viable jobs” in businesses which are suffering now but anticipate a recovery post COVID. The JSS is open to all small and medium enterprises (SMEs). Large businesses are also eligible if they can prove their revenue has fallen because of coronavirus.
How will the scheme work?
The government will contribute towards the wages of employees who have not been able to return to the workplace full time due to the coronavirus and are working fewer hours than normal. Workers will be paid two thirds of their salary for the hours they cannot work.
To be eligible, employees must be working at least a third of their contracted hours and be paid for those hours in full by their employer. The government and the employer will each cover one third of the pay for the hours they are unable to work. The government grant will be capped at £697.92 per month. The HMRC factsheet does not specify if the employer’s contribution will also be capped but said it will publish further guidance shortly.
Employees will be allowed to work more than a third of their contracted hours and still be eligible for the scheme, but the amount the government will pay is reduced.
There are concerns workers at companies forced to close because of coronavirus restrictions – where no working hours may be possible – will be left without support.
What does the scheme mean for employers?
All SMEs will be eligible to access the JSS without the need for a financial assessment. The HMRC factsheet on JSS does not say how it will define an SME, but the usual definition of a ‘small and medium enterprise’ is one which has at least two of the following:
- turnover of less than £25.9m,
- fewer than 250 employees, and
- gross assets of less than £12.9m
Larger businesses can take part but must prove they have been adversely affected by coronavirus. This will be assessed by a financial test. Furthermore, they cannot make capital distributions, such as dividend payments or share buybacks, whilst accessing the grant.
Employers can take part regardless of whether they used the furlough scheme – those retaining furloughed staff on shorter hours can be part of the scheme and still get the job retention bonus announced earlier this summer. Employees cannot be made redundant or put on notice while a Job Support Scheme is being claimed on their behalf. Employers must decide on the affected employees and notify the staff of this change.
Which employees are eligible?
- Employees must be on an employer’s PAYE payroll on or before 23 September 2020 and a Real Time Information (RTI) submission notifying payment to that employee must have been made to HMRC on or before that date.
- The employee must work at least 33% of their usual hours for the first three months of the scheme. After 3 months, the Government will consider whether to increase this minimum hours’ threshold.
- Employees will be able to cycle on and off the scheme. They do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.
Although National Insurance and pension contributions will remain payable, the government grant does not cover employers’ NICs or pension contributions. Employers must pay these costs as usual. HMRC is yet to provide more guidance however presuming this will be calculated on the amount paid to the employee through the payroll, the employer will also bear the cost of Class 1 employer NICs and pension contributions applicable to wages subsidised by the government.
How to claim
Employers will be able to make a claim online through Gov.uk from December 2020. Grants will be payable monthly in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
What are Cintra doing?
As always, we are working hard to ensure that we continue to provide the best possible service during these uncertain times. Once further guidance is available from the government, we will be able to provide additional guidance and more tools to help our customers.