(Updated) Coronavirus Job Support Scheme: Five Questions Answered

The JSS is set to go live on 1 November 2020 and it is currently intended that the scheme will run until April 2021.

Here are five key questions that employers should consider ahead of the scheme’s roll out:

1. What is the Job Support Scheme?

Businesses that are operating but facing decreased demand can get support for wages through JSS Open. Those businesses that are legally required to close their premises as a direct result of coronavirus restrictions can get the support they need through JSS Closed.

Under the JSS Open, the employee will need to work a minimum of 20% of their usual hours. The employee will receive normal pay for the hours they work and two-thirds of pay for the hours they do not work.  For that two-thirds top-up, the government will pay 61.67% of the reference salary, up to a maximum of £1,541.75 per month, and the employer will pay 5%, plus NI and pension contributions on the full amount. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

Under the JSS Closed, businesses required to close premises altogether as part of local or national restrictions will be able to apply for Government grants covering up to two-thirds (67%) of salaries for employees that are unable to work as a result, capped at £2,083.33 per month.

2. Who can make a claim?

According to Government guidance, all employers with a UK bank account and UK PAYE schemes can claim either form of grant.

2.1 Businesses with reduced demand

Larger businesses will additionally be subject to a financial assessment in which they will need to show a reduction in turnover due to Covid-19. There will be no such financial assessment for SMEs.

Large employers should also refrain from making capital distributions, such as dividend payments or share buybacks, whilst subscribing to the grant.

Employees themselves will need to 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 23 September 2020.

The employee will be required to work at least 20% of their usual hours.

2.2 Businesses forced to close

Businesses seeking to claim the two-thirds grant must have been legally required to close their premises (or restrict them to delivery or collection only services) for a minimum of 7 consecutive days. Note that businesses required to close as a result of specific workplace outbreaks by local public health authorities are not eligible for the scheme.

Again, the employees concerned will need to be on an employer’s PAYE payroll on or before 23 September 2020 (with a Real Time Information (RTI) submission notifying payment to that employee to HMRC having been made on or before 23 September 2020) in order to qualify.

3. What does the grant cover?

3.1 Businesses with reduced demand

For every hour the employee does not work, both the Government and the employer will pay two thirds of the usual hourly wage for that employee (with the Government contribution capped at £1,541.75 per month).

Employers will initially need to stump up the money for both their own and the Government’s contribution. The Government will then reimburse the employer in arrears. Note that the grant will not cover Class 1 employer NICs or pension contributions, so employers will need to meet these costs themselves.

For employees who are paid a fixed salary, the Reference Salary is the greater of:

• the wages payable to the employee in the last pay period ending on or before 23 September 2020
• the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme

For employees whose pay is variable, the Reference Salary is the greater of:

• the wages earned in the same calendar period in the tax year 2019 to 2020
• the average wages payable in the tax year 2019 to 2020
• the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

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.

3.2 Businesses forced to close

The Job Support Scheme will pay a grant to the employer, in arrears, of up to two-thirds of each eligible employee’s usual wages, up to a maximum of £2,083.33 per month.

The whole of the grant must be used to meet employee costs in the form of wages and relevant payroll taxes.

The grant will not cover Class 1 employer NICs or pension contributions, which will remain payable by the employer. Employers may elect to top up employee pay at their own cost.

Further guidance at the end of October will set out how to work out reference salary for JSS Closed.

4. How to claim the Job Support Scheme grant

Claims for either form of grant should be made online via gov.uk from December 2020. Claims must be submitted only in respect of a given pay period, after payment to the employee has been made and after that payment has been reported to HMRC via an RTI return. This is because the grants can only be used as reimbursement for wage costs actually incurred.

5. How should the arrangement be documented?

The Government guidance says that employers must:

• (i) Agree the new arrangements with their staff;
• (ii) Make any changes to the employment contract by agreement; and
• (iii) Notify the employee in writing.

The agreement must be made available to HMRC on request.

Other useful links regarding the Job Support Scheme:

• The Job Support Scheme: Policy Paper
• HM Treasury’s Winter Economic Plan
• The Job Support Scheme Factsheet
• Job Support Scheme Expansion for Closed Business Premises Factsheet

*The information set out in this article is correct at the date of publication (27 October, 2020). The effect of coronavirus on businesses is a fast-changing area and so it is important to obtain legal advice to ensure you are properly protected. Visit our Coronavirus (COVID-19) Hub for more Leading Insights.

Contact us

If you have any questions regarding the impact of the Coronavirus upon your business or are seeking up-to-date legal advice on employment matters, contact Peter Rolph on 01202 294 566 or email [email protected]. Alternatively, contact a member of our Employment team in Bournemouth.