• Date

    26 Oct 2020
  • Category

Job Support Scheme Update

Following the initial announcement of the Job Support Scheme (JSS) on 24 September 2020 as detailed in our earlier Insight, the Chancellor announced changes to the scheme on 22 October.

The generosity of the scheme has been increased to account for the increased pressure on employers, and the Government has named the scheme ‘JSS Open’ for businesses in Tiers 1 and 2 that are able to remain open and ‘JSS Closed’ for businesses in Tier 3 that are forced to close.

JSS Open

To be eligible, an employee must work a minimum of 20% of their usual hours; this has been reduced from a previously required 33%. Employers are to pay the contracted wage for these worked hours. From the hours not worked, the employer will be required to pay 5% of the usual wage capped at £125 per month, with the Government funding 61.67% of the usual wage via the JSS capped at £1,541.75 per month. These caps mean the maximum reference salary will be £3,125.

As an example, an employee with a usual monthly wage of £1,000, will be paid:

  1. £200 by their employer for the 20% of hours worked (ie. 20% of £1,000)
  2. £40 by their employer for 5% of the hours not worked (ie. 5% of £800)
  3. A further £493.36 by the Government for 61.67% of the hours not worked (ie. 61.67% of £800)

This provides a total of £733.36, so the employee will receive a minimum of 73% of their usual wage if this doesn’t exceed £3,125.

Employers must have a UK bank account and a UK PAYE scheme, and there is no prerequisite of having used the Coronavirus Job Retention Scheme (CJRS).

JSS Closed

The scheme has been extended for businesses that are in the Tier 3 areas, on very high risk alert. These businesses are legally required to close, or whose services are restricted to delivery or collection only, for a temporary period due to regional or national restrictions.

The Government JSS grant will cover two-thirds of a worker’s usual wages where they are not able to work due to their employer having to close. This will be capped at £2,083.33 per month. Employers will only be required to fund the employer national insurance and any pension contributions.

Eligible employees are those whose employer’s business has been legally required to close and therefore the employee is not able to work. This will need to be the case for a minimum period of seven consecutive days.

The larger business test

There are no eligibility tests for small and medium sized businesses. However, larger businesses with 250 employees or more on all of their payrolls on 23 September 2020 are required to show that their turnover has either remained level or fallen as a consequence of the coronavirus, as follows:

  • If quarterly VAT returns are submitted – compare the total sales figure on a VAT return due to be filed and paid between 30 August 2020 and 7 November 2020 with the total sales figure from the same quarter in 2019.
  • If monthly VAT returns are submitted – compare the sales figures from three consecutive months’ VAT returns that are due to be filed and paid by 7 November 2020 with the same period from 2019.
  • If VAT returns are submitted less frequently – compare the sales figures from three consecutive months’ where a VAT return is due to be filed and paid by 7 November 2020 with the same period from 2019.

Further considerations

  • An employee must have been on the payroll on 23 September 2020, with an RTI submission reporting a payment for the employee by that date.
  • Employees who left after 23 September and then re-hired are eligible.
  • Employees can be flexibly placed on and off the scheme, with the minimum period of seven consecutive days when on the scheme each time.
  • Employers are required to have a written agreement in place of the temporary working arrangement for each employee when placed on the scheme.

The usual wage or reference salary

This should only include an employee’s regular contractual payments; any discretionary payments and non-cash payments and benefits are to be excluded.

For employees who receive a fixed salary, their reference salary will be the higher of

  • the wages paid in the last pay period before 23 September 2020, and
  • the wages paid in the last pay period before 19 March 2020.

For employees who receive variable pay, their reference salary will be the higher of

  • the wages earned in the same calendar period from the 2019/2020 tax year,
  • the average wages from the 2019/2020 tax year, and
  • the average wages from the period 1 February 2020, or employee’s start date if later, to 23 September 2020.

For employees who work fixed hours, their usual hours will be the higher of

  • the contractual hours for the last pay period before to 23 September 2020, and
  • the contractual hours for the last pay period before 19 March 2020.

For employees who work variable hours, their usual hours will be the higher of

  • the hours worked in the same calendar period from the 2019/2020 tax year,
  • the average hours worked in the 2019/2020 tax year, and
  • the average hours worked from the period 1 February 2020, or the employee’s start date if later, to 23 September 2020.

No employer national insurance or pension contributions are included in the Government JSS grant, and these are therefore still payable by the employer. A further restriction is that employers will not be able to make employees redundant or issue redundancy notices to employees whilst they are on the Job Support Scheme.

Employers will be able to make claims online from 8 December 2020, on a monthly basis in arrears once an RTI submission has been made.

The scheme is complex as one would expect in view of the number and size of claims expected. There is still more information awaited and we are expecting the finer details of the scheme to be announced as we approach 1 November. We will of course provide further updates as soon as this guidance is released and we are here to help with any questions you may have or provide any further information or support.

About the author

Dave Hedges Photo

Dave Hedges

Partner Southampton
View all news & insights

Related content

You might also be interested in