New Job Support Scheme after the Furlough scheme ends at the end of October

Key information on the UK government's Job Support Scheme which will provide support for businesses after the end of the Coronavirus Job Retention Scheme

Last updated: 25 September 2020, 14:00

The JSS is the second phase in UK government support measure for organisations during the COVID-19 pandemic. It offers grants to cover up to 22% of the salaries of employees working part-time due to the impact of coronavirus.

What you need to know

From the rules announced so far, our understanding is that the Job Support Scheme (JSS) will apply as follows below. The JSS will open on 1 November 2020 and run for six months, until April 2021. 

The JSS will give support to those businesses which, while having enough work to continue to employ their workers, are facing reduced demand likely to continue into the winter months. The employer must continue to pay workers for hours worked, but support through the new JSS is available for the cost of the hours not worked.

• The government will make a grant to the employer equal to the cost of one third of hours not worked up to a cap of £697.92 per month.
• The employer will bear the cost of a further one third of hours not worked.

It seems likely from the above that the employee is unlikely to receive anything further for the remaining one third of hours not worked although further detailed guidance and legislation is expected to give more clarity about whether the employer could top up the salary further.

Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme (CJRS), although much of the practical detail is very reminiscent of the CJRS.

Illustration

Sue works five days a week and earns £400. Following discussion, she agrees to accept short-time working of two days per week (40%) and her employment contract is revised to reflect this. Her employer is using the JSS.

Sue is paid £320 in accordance with her employment contract through the payroll and reported through RTI in the usual way.

This comprises:

Cost borne by employer for time worked:
40% x £400 = £160

Cost borne by employer:
1/3 of the normal wages for time not worked: 1/3 x 60% x £400 = £80

Government grant:
1/3 of the normal wages for time not worked: 1/3 x 60% x £400 = £80

Total pay to Sue = £320

In this illustration, the employee is earning 80% of her normal wage. The 1/3 contribution rule ensures that employees on this scheme continue to earn a minimum of just over 77% of their normal wages (unless the government contribution has been capped, see above).

Further rules to note

For employers:

JSS grants do not cover employers’ National Insurance Contributions or pension contributions. Employers’ must pay these costs as usual. ICAEW presumes this will be calculated on the amount paid to the employee through the payroll, so £320 in the illustration above. But we await more guidance.

The claims portal on gov.uk will open in December 2020.

Each claim will be submitted for a given pay period. Each claim must be after the employee has been paid and that payment has been reported to HMRC through RTI.

Grants reimbursing employers for the government’s contribution will be paid in arrears, on a monthly basis.

Employers using the JSS will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.

Any employer with a UK bank account and UK PAYE scheme can claim the grant.

Large businesses will have to meet a financial assessment test, which is to be based on turnover. Turnover must be lower now than it was before COVID-19 caused difficulties for the business. We do not yet know exactly what this test will look like.

There will be no financial assistance test for small and medium sized enterprises.

There is an expectation that large employers will not be making dividend payments or share buybacks. Details on how this is to be defined is expected to be provided in further guidance.

For employees:

Eligible employees must have been on payroll and have been included in a full payment submission made on or before 23 September 2020. This means that some newer employees who were not previously eligible for the furlough scheme can be entered into the JSS.

During the first three months of the scheme, 1 November 2020 to 31 January 2021, employees must work at least 33% of their usual hours. The government will consider increasing this minimum threshold for the following period.

For time not worked, employees will be paid up to two-thirds of their usual wage.

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.

Calculating the grant

The government grant is based on 1/3 of the hours not worked and usual wages. It seems inevitable that the ‘usual wages’ calculation is going to follow the principles used in the CJRS partial furlough scheme, with all the arithmetic that involved. The underlying pay and hours will be those before the furlough scheme adjustments. More guidance is expected on this.

Compliance

The HMRC factsheet on JSS has a separate section on compliance and indeed, some of the rules already announced make it clear that HMRC has designed this new support very much with compliance in mind. The scheme is to help support viable jobs in businesses which are suffering now but which anticipate a recovery post COVID.

ICAEW reproduces this section of the fact sheet below:

HMRC checks

• HMRC will check claims. Payments may be withheld or need to be paid back if a
  claim is found to be fraudulent or based on incorrect information. Grants can
  only be used as reimbursement for wage costs actually incurred. 
• Employers must agree the 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.
• Our intention is that employees will be informed by HMRC directly of full
  details of the claim.