The new Job Support Scheme (JSS) comes into effect on 1st November, replacing the Coronavirus Job Retention Scheme. So, what does this mean for your businesses?
What is the Job Support Scheme?
Initially, the JSS was designed to continue assisting business in bringing people back to work. The government made a contribution where employees were working a portion of their regular hours. However, because of the latest developments, and the introduction of the new level 3 lockdown, the scheme has been updated and has two versions.
JSS Closed – for businesses who have been forced to shut because their region is in level 3.
JSS Open – for businesses who can still operate but are facing decreased demand because of Covid-19.
Below we have shared what you need to know to understand the schemes, which one you can apply for, and the amount that you can claim.
To be eligible to claim for either JSS Open or JSS Closed employers must be enrolled on PAYE online and have a UK, Channel Island or Isle of Man bank account.
Employers will be able to claim for employees who were on their payroll between 6th April 2019 and 23rd September 2020.
Conditions of claim
To claim under the JSS, you must meet the following conditions:
- Employers cannot claim for an employee who has been made redundant or serving a contractual or statutory notice period
- The employer will still be responsible for the payment of any Employers NI and pension costs
- The employer must pay the PAYE and NIC due on wages to HMRC
- Grant monies must only reimburse monies already paid to the employee
- Capital distributions will not be made by large employers whilst using the scheme
Making the claim
Employers will be able to claim from 8 December 2020 to cover wages and salaries paid in November. Claims can only be made once a month and only in arrears; the employer having to make payment of the wages first.
Job Support Scheme closed – for employers who are legally required to close their business.
If your business has been legally required to close as a direct result of restriction set out by one or more of the four governments of the UK, then you can get support to cover the wage costs of employees who have been instructed to cease working.
Claims under JSS Closed can only be made for a period where restrictions are in place, and employees have been instructed to cease working for a minimum of 7 consecutive days.
Calculations
Under the JSS Closed scheme, the grant will cover 2/3 of the normal pay for furloughed workers up to a maximum grant of £2083.33.
The employee must give up 1/3 or their wages and agree to this change to their employment contract in writing.
Example of a JSS closed claim
Joanne works as a manager in a pub and has a salary of £32,000 per year or £2,666.67 per month.
Because of tier 3 restrictions, the pub is closed.
Joanne will receive 2/3rd of her monthly salary – a payment of £1777.78 before deduction of tax and NI.
Her employer will be able to claim £1,777.78 back as it is under the £2083.33 cap.
Job Support Scheme open – for employers still open but facing reduced business as a result of COVID-19.
A business is eligible to claim under JSS Open if some or all of their employees are working at least 20% of their usual hours. Large businesses with +250 staff must also undertake a financial impact test to be eligible.
To be eligible employers must have reached written agreement with their employees to the temporary working agreement relating to the reduced hours.
Under JSS Open employers can claim a grant for up to £1,541.75 per month, depending on how many hours the employee works. An employee who works 20% of their contracted hours will receive:
- 20% of pay for time worked
- 4% of pay for non-time worked (capped at £125 per month)
- 49.33% of pay for non-time worked (capped at £1541.75 per month)
[4% = 5% x 80% unworked : 49.33% = 61.67% x 80% unworked]
In total, the employee will receive 73.33% of their pay and have to forego 26.67%.
The employer must pay the whole amount, and only 49.33% can be claimed back through the JSS Open scheme.
Example of a JSS Open claim
Nathan is a manager in a construction business on an annual salary of £36,000 – £3,000 per month. In a normal month, he would work 225 hours which is £13.33 per hour.
Nathan has agreed to work 45 hours per month (20% of 225 qualifies for JSS Open)
Nathan’s pay is made up as follows
£ 600.00 – 45 hours x £13.33 for hours worked
£ 120.00 – 9 hours x £13.33 – 5% of unworked hours
£1479.63 – 111 x £13.33 – 61.67% of unworked hours
Nathan receives £2,199.63, before deduction of tax and NI, compared to his normal salary of £3,000.
Nathan’s employer costs are £600 +£120 + any employers NI and pension of the gross payment of £2,199.63.
Nathan’s employer can claim £1,479.93 under JSS Open.
A further addition from HMRC is that they will publish the names of employers which use either JSS Open or closed.
Employees will be able to check if their employer has made a JSS claim relating to them via their personal tax account. This new feature is designed to prevent employers from making JSS claims while also asking their employees to work.
Get in touch for more advice on the Job Support Scheme.
