The Job Support Scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid19, to help keep their employees attached to the workforce. The scheme will open on 1 November 2020 and run for 6 months AND it has been expanded to provide temporary support to businesses whose premises have been legally required to close as a direct result of Coronavirus restrictions set by one or more of the four governments of the UK.
The company will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job.
The Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
Who is Eligible to claim the Job Support Scheme?
Are you an employer with a UK Bank account and UK PAYE Schemes?
If you are, then yes you are eligible. All employers with a UK bank account and UK PAYE schemes can claim the grant – you do not need to have previously used the Coronavirus Job Retention Scheme.
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.
The government have confirmed that they would expect that large employers using the Job Support Scheme will not be making capital distributions, such as dividend payments or share buybacks, whilst using the scheme.
Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23rd September 2020.
To support viable jobs, for the first three months of the scheme the employee must work at least 33% of their usual hours.
Employees can come on and off the scheme, and do not need to work the same pattern each month, but each arrangement must last at least 7 days.
What does the Job Support Scheme grant cover?
For every hour not worked by the employee, both the Government and employer will pay a third each of the usual hourly wage for that employee. The Government contribution will be capped at £697.92 a month.
Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer
“Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. We are awaiting full details in this regard from the government. Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.
Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. Our expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
What does “Reduced Hours” actually mean with regards to the Job Support Scheme?
- The employee must be working at least 33% of their usual hours
- For the time worked, employees must be paid their normal contracted wage
- For time not worked, the employee 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
How & when can I claim the Job Support Scheme?
The scheme will be open from 1 November 2020 to the end of April 2021. Employers will be able to make a claim online through the government website from December 2020. They will be paid monthly.
Grants will be payable 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.
Government Example for the Job Support Scheme
Beth normally works 5 days a week and earns £350 a week. Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours)
- Her employer pays Beth £140 for the days she works.
- And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140, bringing her total earnings to £280, 80% of her normal wage.
- The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.
Job Support Scheme example – Table Highlighting Percentages Paid
|% of usual hours worked||33%||40%||50%||60%||70%|
|% of usual hours not-worked, due to COVID-19||67%||60%||50%||40%||30%|
|Employee gross earnings under JSS (% of normal pay)||78%||80%||83%||87%||90%|
|Government grant (as a % of normal pay)||22%||20%||17%||13%||10%|
|Cost to employer (as a % of normal pay), ignoring NICs||55%||60%||67%||73%||80%|
Job Support Scheme (JSS) Expansion 9th October 2020 – further guidance
The Job Support Scheme (JSS) is being expanded to provide temporary support to businesses whose premises have been legally required to close as a direct result of Coronavirus restrictions set by one or more of the four governments of the UK.
The JSS is available to employers for six months, from 1 November 2020 and will be reviewed in January.
Am I eligible for the Expanded Scheme?
The conditions are the same as announced for the normal job support scheme.
The additional condition to qualify for the expanded scheme, is that the business, because of restrictions set by one or more of the four governments in the UK, are legally required to close their premises. This includes premises restricted to delivery or collection only services from their premises
The scheme will pay a grant to the employer calculated on the number of eligible employees who have been instructed to and cease work at the relevant premises. Employers will only be able to use the scheme for employees who cannot work (paid or unpaid) for that employer.
Employers must be instructed to and cease work for a minimum of 7 consecutive (or calendar) days. An employee can return to work at a later date.
Claims must not overlap and must be made monthly in arrears. These payments will be taxable, and employers will be required to cover employer NICS and automatic enrolment pension contributions in full, where applicable, but are not required to make further contribution to wage costs. However, employers can top up employee pay if they wish.
Businesses required to close because of specific workplace outbreaks by local public health authorities are not eligible for this scheme.
Similar to the Job Support Scheme, where employees receive two-thirds of their wages for time not worked, the grant per eligible employee available from the UK Government is two-thirds of their normal pay up to a limit of £2100 per month. We are awaiting further detail from the government on how normal pay is calculated.
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.
What does the Expanded Job Support Scheme cover?
The employer must use the scheme to cover their employees’ wages and pay relevant payroll taxes. The whole of the grant must be used to meet employee costs.
The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
The grant will be paid in arrears.
How will I claim the Expanded Job Support Scheme?
This is a temporary scheme, available to employers from 1 November 2020 for 6 months and will be reviewed in January.
Employers will be able to make a claim monthly online through gov.uk from December 2020 and this will be reviewed in January 2020.
We hope this information helps you and we are here for you during this difficult time. We will continue to keep you updated as the Government releases new information. Our business contingency plan is in place and we will do everything we can to support our clients during this uncertain period, please do not hesitate to contact us here if you have any concerns or queries.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above