Job Support Scheme,are you Ready?
The Job Support Scheme has been created to support individuals and businesses to better deal with the challenges created by the coronavirus (COVID-19) pandemic, during the winter months. The government is providing additional support to help employers retain their employees through the JSS with the scheme coming into effect on 1st November.
Read below to find out more....
What is the Job Support Scheme?
The Job Support Scheme (JSS) was first announced by the Chancellor of the Exchequer on 24th September. Since its initial conception, further updates were made on 22nd October, amid calls for improved support to protect jobs and businesses as the pandemic and government intervention to control it (in varying degrees) takes a tighter grip on the nation.
Whilst some businesses have managed to return to near normal levels of demand, others continue to face severe challenges.
The Job Support Scheme provides different types of support to these struggling businesses so that they can get the right assistance, at the right time, according to their situation. Businesses that are operating but facing decreased demand can get support for wages through the JSS open. 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, will receive the support they need through JSS Closed.
Replacing the Furlough Scheme which comes to an end on 31 October, the JSS will come into effect on 1 November 2020 and will continue for at least the next six months.
Fact Sheets on both the JSS Open and the JSS Closed and a Policy Paper have now been published, and further guidance is due to follow by the end of the month.
Many employers can operate safely but continue to face reduced demand so they may need extra support over the winter to help keep their employees attached to their workforce. For these employers, the Job Support Scheme, through JSS Open, will give employers the option of keeping their employees in a job on shorter hours rather than making them redundant.
Employees of these businesses 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 66.67% 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 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.
Employers that have been 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. For these businesses, the Job Support Scheme, through JSS Closed, will help them through the period that they are directly affected by these restrictions by supporting the wage costs of employees who have been instructed to cease work in eligible (closed) premises.
Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish . This will help protect employee incomes, limit unemployment and retain employer-employee matches so that these premises are able to reopen as quickly as possible when circumstances allow.
Employees may also be entitled to additional financial support, including Universal Credit.
When will the Job Support Scheme be in operation?
The Job Support Scheme will be open 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. Neither the employer nor the employee needs to have benefitted from the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
Eligibility criteria for all aspects of the Job Support Scheme
The following eligibility criteria apply to all employers and/or employees being claimed for under the Job Support Scheme, whether the employer is claiming the JSS Open grant or the JSS Closed grant.
An employer can claim the JSS Open and JSS Closed grant at the same time for different employees. An employer cannot claim for a single employee under both schemes at the same time.
Employees who can be claimed for (JSS Open and JSS Closed)
Eligible employers will be able to claim the Job Support Scheme grant for employees 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.
Employers can only claim for employees that were in their employment on 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them.
An individual is an employee for the purposes of this scheme if they are treated as an employee for Income Tax purposes.
Employees can be on any type of contract, including zero hours or temporary contracts.
Agency workers are regarded as employees of an employment agency for the purposes of this scheme, provided they are employees for Income Tax purposes.
Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
Employers will be able to top up employee wages above the level of minimum contributions at their own expense if they wish.
Employers cannot claim both JSS Open and JSS Closed in respect of a single employee for the same day.
Training in unworked hours
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.
Working Tax Credits
Employees whose hours reduce due to the COVID-19 pandemic will continue to have access to Working Tax Credit and its childcare element for the duration of the JSS scheme.
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 Job Support Scheme during the relevant assessment period.
Conditions of claiming
There are a number of conditions that apply to all employers using the Job Support Scheme. The conditions apply to all employers claiming JSS Open and JSS Closed unless stated.
Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
The government expects that 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:
free or other distribution
any equivalent payment that a partnership may make to its partners
The government does not plan to make this expectation a contractual or legal condition of the scheme but 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.
Paying employee taxes and pension contributions
The Job Support Scheme grant will not cover National Insurance contributions (NICs) or pension contributions. These contributions remain payable by the employer.
Employers must deduct and pay to HMRC income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.
Employers must also pay to HMRC any employer NICs due on the full amount that that is paid to the employee, including any amounts subsequently met by a scheme grant.
Employers must report these payments via a Full Payment Submission (FPS) to HMRC on or before the pay date in the normal way.
Employers and Employees must also still pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped saving into their pension. If applicable Student Loan deductions and the Apprenticeship Levy must also still be paid.
Grant monies must only reimburse sums already paid to the employee
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.
Employers cannot enter into any commitment or transaction with the employee which would reduce wages below the amount claimed (for example a salary sacrifice scheme). This includes any administration charge, fees or other costs in connection with the employment. Where an employee had authorised their employer to make deductions from their net salary, these deductions can continue while the employee is working reduced hours provided that these deductions are not administration charges, fees or other costs in connection with the employment (for example, pension contributions and charitable giving).
Employees will be able to check if their employer has made a Job Support Scheme claim relating to them via their Personal Tax Account (sign up on GOV.UK).
How to claim
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. More detail about this process will be published in guidance by the end of October 2020.
Agents who are authorised to do PAYE online for employers will be able to claim on their behalf.
HMRC will check claims and payments may be withheld if HMRC suspects a claim to be ineligible.
The amount of any overpayment by the employer must be paid back to HMRC where a claim contains incorrect information.
The full amount of any grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount overclaimed may be applied where appropriate. HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect Job Support Scheme grant claim.
HMRC intend to publish the names of employers who have used the scheme. The public can report fraud to HMRC if they have evidence to suggest an employer is abusing the scheme.
Employees will be able to check if their employer has made a claim relating to them via their Personal Tax Account (sign up on GOV.UK).
Other support schemes
Employers claiming the Job Support Scheme may still claim the Job Retention Bonus in respect of the same employee if they are eligible. Grants claimed under the Job Support Scheme can be used by employers to pay an employee’s wages and help meet the Lower Earnings Limit of the Job Retention Bonus.
There may be occasions where an employee’s pay period includes both eligible amounts to be claimed under the Coronavirus Job Retention Scheme for a period where they were furloughed until 31 October 2020 and an amount in respect of the Job Support Scheme from 1 November 2020. The amounts to be claimed from each of the schemes should be calculated separately following the guidance for each scheme which will take into account the number of days that fall within each of the scheme’s timelines. No amount of gross pay should be included in more than one scheme.
Employees who work variable hours
The variable hours calculation applies if either:
the employee is not contracted to a fixed number of hours
the employee’s pay depends on the number of hours they work
For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the higher of:
the number of hours worked in the same calendar period in the tax year 2019 to 2020
the average number of hours worked in the tax year 2019 to 2020
the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020
This should include hours paid as annual leave and statutory leave.
The calculation of usual hours is not and cannot be altered if the employee is expecting to work more or fewer hours than this in the future.
For employees who are part of a flexible work time arrangement, employers should:
not count as hours worked any hours that the employee worked but was not paid for because they accrued paid time off which they could take later
count as hours worked any hours that the employee took as paid time off (‘flexi-leave’), which they had accrued by working additional hours at some other time
For employees who are paid per task or per piece of work done whose hours cannot be calculated in this way, hours can be estimated based on the number of ‘pieces’ produced and the average rate of work per hour, as per National Minimum Wage rules.
We fully understand that the JSS Open and Closed schemes may seem a little confusing, due to their complexity. Please get in touch should you require any support with your payroll during these times.
Disclaimer: The information contained in this article is intended to be a guide and is not intended to be exhaustive. No action should be taken on the basis of information contained herein without obtaining the necessary advice. No responsibility can be accepted for loss or damages occasioned to any person acting or refraining from acting as a result of the material contained herein.