Job Support Scheme: amendments and further details announced
There are two types of relief under the JSS:
- Businesses that are operating but facing decreased demand can apply for support for wages through JSS Open. This is a revised and extended form of the JSS originally announced on 24 September (see our separate note and our comparison table below showing the differences between the original and revised schemes).
- Those businesses that are legally required to close their premises as a direct result of coronavirus restrictions imposed by one or more of the four governments of the UK can apply for the support they need through JSS Closed. The Chancellor did not announce any revisions or extensions last week to JSS Closed.
JSS Open and JSS Closed are both summarised in the respective factsheets and HMRC’s policy paper published 22 October (the “Policy Paper”). A short summary of the main features of JSS Closed appears at the end of this note - businesses affected by closure should feel free to speak to their usual Macfarlanes contact for further details.
The following table summarises the changes made on 22 October to original version of JSS announced on 24 September:
|JSS - 24 September 2020 version (factsheet)||JSS Open – 22 October 2020 (factsheet)|
|Eligibility for employers||
“Large businesses” will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19.
JSS Open now refers to “Large employers” being those having 250 or more employees on 23 September 2020.
These employers will have to meet a new Financial Impact Test, so the scheme is only available to those whose turnover has stayed level or is lower now than before experiencing difficulties from Covid-19. The Financial Impact Test uses VAT sales figures for the three months before a filing date falling in the period 31 August - 7 November 2020, compared with the same period in 2019. The guidance gives various examples including the following:
No change for SMEs. Large charities are also not subject to the Financial Impact Test.
|Restriction on capital distributions||Large employers using the JSS will
not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant.
This feature remains in place in that the Government says in the guidance that it expects 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. This includes:
However, the guidance also says that the Government does not plan to make the above expectation a formal legal or contractual condition of the scheme. Instead, the guidance “encourages business to reflect on their responsibilities and that taxpayers should be able to rely on public money only being claimed where it is clearly needed.” In the section of the guidance dealing with ‘Fraudulent claims’, the guidance confirms that HMRC intends to publish the names of both employers who use JSS Open and those who are charged a penalty because of a ‘deliberately incorrect’ JSS claim.
Given the intent of the scheme, these ‘naming and shaming’ provisions of the guidance are likely to provide a deterrent to corporate groups using the JSS whilst at the same time making capital distributions, even if those distributions do not amount to a formal breach of the conditions of entry to the scheme.
|Restriction on redundancies||Employers using JSS Open
must not place employees
or make them redundant.
|This feature has been retained. Businesses cannot claim in respect of any employee who has been made redundant, or “who is serving a contractual or statutory notice period during the claim period”. The guidance is not explicit as to whether this applies to any employee serving notice regardless of whether they are also redundant.|
|Which employees are eligible?||No guidance.||Employees on all types of contracts are eligible for the JSS (including those on variable or zero hours contracts and agency workers). Employees must be on an employer’s PAYE payroll between 6 April 2019 to 23:59 on 23 September 2020 to qualify.|
|Employee eligibility – minimum hours worked||Employees were only eligible if employed for at least one-third/ 33% of normal hours.||The minimum hours requirement has now been reduced to 20%. This means that employees working as little as one day a week are now eligible for the scheme.
This will ensure employees can earn a minimum of at least 73% of their normal wages when only working 20% of their normal hours, where their usual wage does not exceed the reference hours.
For example: If someone was being paid £587 for their unworked hours, the Government would be contributing £543 and their employer only £44.
|Employer contribution to unworked hours||Employers were required to contribute one-third/ 33% to the employee’s "unworked" hours.
NICs or pension contributions remained payable by the employer.
This contribution has been significantly reduced to just 5%, up to a cap of £125 per month (plus NICs and automatic enrolment pension contributions in full) as a contribution.
Employers can top up employee’s wages above the 5% contribution at their own discretion.
The heavily reduced employer contribution is clearly designed to make JSS Open appealing to businesses.
|Government contribution to unworked hours||The Government was only required
to contribute one-third of unworked hours up to a maximum payment of £697.92.
|Government funding has now increased to a contribution of 61.67% of unworked hours, capped at £1,541.75 per month.|
Employer must pay
|Consultation with employees/ agreement to the JSS||
Employers must agree new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
|In addition to the previous requirements, employers now must have agreed the temporary working arrangement for shorter hours in writing with employees (or the relevant union). The Government has stated that further guidance on precisely what needs to be included in any agreement will be published by the end of October. The working assumption at present is that this will be broadly consistent with the requirements under the CJRS.|
|Other interesting points to note||N/A||
As noted above, HMRC intends to publish the names of employers who have used the scheme or been penalised for misuse. This was not the case under the furlough scheme.
Q&A on the JSS Open
Many employers can continue to operate in a covid secure manner but continue to face reduced demand so they may need extra support over the winter to help keep their employees attached to their workforce. The Policy Paper says that, for these employers, JSS Open will give employers the option of keeping their employees in a job on shorter hours rather than making them redundant.
The JSS will be available from 1 November 2020 and run for 6 months, until 30 April 2021. The government will review the terms of the scheme in January. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved.
The Policy Paper summarises the operation of the JSS as follows:
- The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked.
- Alongside this, the employee will receive 67% of their normal pay for the hours not worked - this will be made up of contributions from the employer and from the government.
- The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish.
- The Job Support Scheme grant will not cover NICs or pension contributions. These contributions remain payable by the employer.
- Employers will be able to top up employee wages above the level of minimum contributions at their own expense if they wish.
- The government will pay the remainder of 61.67% of reference salary for the hours not worked, up to a maximum of £1,541.75 per month.
- This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.
Information taken from the Policy Paper unless otherwise stated.
- who were on their PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. This means an RTI Full Payment Submission notifying payment in respect of that employee must have been made to HMRC at some point from 6 April 2019 up to 11:59pm 23 September 2020;
- whose hours have been reduced by no more than 80% for at least seven consecutive days;
- who have not been made redundant; and
- who are not working their contractual or statutory notice period. This condition falls under the “redundancy” heading, but would appear on its face to apply to anyone serving their notice for any reason.
- an employer (a legal entity) with:
- 250 or more employees on 23 September 2020 must have undertaken a Financial Impact Test demonstrating their turnover has remained equal or fallen to show they have been adversely affected due to coronavirus; or
- an employer with fewer than 250 employees on 23 September 2020 is not required to satisfy the test; and
- some, or all, of their employees must be working reduced hours - employees must still be working for at least 20% of their usual hours; and
- the employer must not be a body in receipt of public funds.
- To be eligible, the employer entity would need to complete a Financial Impact Test to evidence that their income has been impacted due to coronavirus. If the employer’s turnover has remained equal or has decreased compared to the previous year, then they will qualify.
- Large employers who are VAT registered and submit quarterly VAT returns should compare the total sales figure on their VAT return, which is due to be filed and paid between 31 August 2020 and 7 November 2020, with the total sales figure from the same quarter in 2019. This is the figure recorded in box 6 of their VAT return, which captures the total value of all sales (whether subject to VAT or not) and all other outputs excluding any VAT.
- Large employers who submit monthly VAT returns should compare the three consecutive months which are due to be filed and paid by 7 November 2020 with the same period in 2019.
- Large employers who file less frequently should compare the three consecutive months which are due to be filed and paid by 7 November 2020 with the same period in 2019 but will need to have submitted a VAT return between 31 August 2020 and 7 November 2020 to be eligible.
- Large employers who are part of a VAT group will need to use the turnover figures for the VAT group for this calculation.
- HMRC has set out several examples in the Policy to assist in these calculations.
- Further guidance for large employers who are not VAT registered will be available by the end of October.
This test only needs to be taken once before the employers first claim for the Job Support Scheme.
Yes. To be eligible for the grant, employers must have reached written agreement with their employee (or reached written collective agreement with a trade union where the relevant terms are determined by collective agreement) that they have been offered a temporary working agreement. The agreement must be available for view by HMRC on request. HMRC will publish further guidance on what to include in the written agreement by the end of October.
The former. The Policy Paper says that employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made. They should also pay the associated employee tax and employee and employer National Insurance contributions to HMRC, even if the company is in administration.
The Policy Paper says that employers (or agents who are authorised to carry out PAYE online for employers) will be able make their first claim from 8 December 2020 on GOV.UK. Employers will be able to claim from 8 December, covering salary for 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. Guidance regarding performing the calculations are outlined in the policy paper and further guidance will be provided later in the month.
No. You can bring employees on and off the scheme at any time in the six months provided they are on a temporary working agreement (i.e. agreement to work reduced hours) for a minimum of seven consecutive days.
Yes, you can still claim the £1,000 grant in respect of the same employee if they are eligible.
The Policy Paper says that employees will be able to undertake training voluntarily in non-working hours. Where time spent on training attracts a minimum wage entitlement in excess of the grant payment, employers will need to pay the additional wages. They cannot work however, and HMRC will check claims and payments may be withheld if HMRC suspects a claim to be ineligible.
The Policy Paper says that the government will introduce parental pay legislation as soon as possible (covering maternity allowance, statutory maternity, paternity, shared parental, adoption and parental bereavement pay) to avoid parents losing out on their entitlement to parental pay as a result of being put on the JSS during the relevant assessment period. More details on employee eligibility will be available in further guidance published by the end of October.
Summary of JSS Closed
This part of the scheme is designed for businesses that have been officially forced to close:
- it offers Government funding for two-thirds of salary costs;
- to a maximum of £2,100 per employee per month;
- for employees who are compelled to spend at least seven consecutive days away from work.
See the Government factsheet for further details of the scheme.
This is evidently a fast-moving topic, with much ambiguity remaining. Further guidance is promised by the end of October. We will keep clients updated as soon as there are further developments.