Based on information available as of 24 September 2020
In today’s emergency Commons Statement, the Chancellor confirmed that, as originally planned the Job Retention Scheme (JRS) will end on 31 October 2020, noting that it was “fundamentally wrong” to keep people in unviable jobs. However, as the Chancellor’s number one economic priority is to protect people’s jobs, as part of the #wintereconomyplan, and to replace the JRS, he announced that its replacement, the “Job Support Scheme”, will commence on 1 November 2020 and will last for 6 months.
The Chancellor’s aim for the new scheme is for it to be more targeted towards viable jobs, keeping employees in a job on shorter hours rather than making them redundant. Significant detail is still to be provided, but at this stage, we know that:
(a) The Job Support Scheme (JSS) will be available to small and medium sized businesses with a UK bank account and UK PAYE scheme. Large companies will be eligible if they can prove their turnover has been adversely affected during the Covid-19 crises;
(b) JSS will be open to all employees, including those employees not previously furloughed under JRS but excluding any employee who is on a redundancy notice. The change to the short-time working arrangements must be notified to the participating employee in writing;
(c) Claiming under the JSS will not impact the Job Retention Bonus of £1,000 that may be claimed for each employee who, broadly, was furloughed before 11 June 2020 and who is still employed on 31 January 2021 and we assume meets the minimum wage test;
(d) For an employee to be eligible under JSS, an RTI submission for that employee must have been made on or before 23 September 2020 and the employee will need to work at least 33% of their usual hours. The employee’s “usual wage” will be calculated in the same manner as has been the case under JRS. Between them, the government and the employer will then cover part of their salary for the remaining hours not worked. The government will cover a third of this sum, capped at £697.92 per month, while employer’s cover a further third meaning that workers on the scheme will not get their full salary but, for those not capped, should get at least 77%;
(e) Employees can stop and start their participation under JSS and do not have to have the same working pattern each month. Each short working time arrangement, as agreed in writing, must however cover a minimum of 7 days;
(f) The grant will not cover Employers’ NIC or pension contributions; and
(g) A claim under JSS may only be made in arrears, after payment to an employee has been made and the payment has been reported to HMRC via an RTI return.
Clearly there will be significant rules and detail underlying this announcement and, as with the JRS, the devil will be in the detail in respect of:
• employer and employee eligibility;
• confirmation of the eligibility date;
• what counts as working hours:
• what is a viable job;
• what is the interaction with those on zero hour contracts or variable hours; and
• how will claims be made
In a further announcement, the Government made it clear that it does not expect that capital distributions (such as dividends) to be made by large employers who are claiming amounts under the JSS.
If you need help or further information please contact our Employment Taxes Team on email@example.com or speak to your usual PEM contact.