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The Chancellor, Rishi Sunak, set out the government’s new job retention measures on 24 September 2020. The job retention scheme will come to an end, as planned, on 31 October 2020 and will be replaced with the Job Support Scheme (JSS).
JSS is designed to protect viable jobs in businesses which are facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce. The employer will continue to pay its employee for time worked, but the burden of hours not worked will be split between the employer and the Government (through wage support) and the employee (through a wage reduction), and the employee will keep their job. This will ensure employees earn a minimum of 77% (or 7/9) of their normal wages, where the Government contribution has not been capped. The Government contribution will be capped at £697.92 a month.
The breakdown is as follows:
The scheme will open on 1 November 2020 and run for 6 months, until April 2021. Further guidance will be published in due course.
All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme. Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. The government has stated that their expectation is that large employers using JSS will not be making capital distributions, such as dividend payments or share buybacks, whilst accessing the grant. There will be no financial assessment test for small and medium enterprises (SMEs). Further details will be set out in guidance which will be published in due course.
Employees must 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. As has been noted above, for the first three months of the scheme the employee must work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold. Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days. Employees cannot be on notice of redundancy while their employer is claiming JSS.
Grant payments will be made in arrears, reimbursing the employer for the Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer. “Usual wages” calculations will follow a similar methodology as for the Coronavirus Job Retention Scheme. Full details will be set out in guidance shortly. Employees who have previously been furloughed will have their usual underlying pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough. Employers must pay employees their contracted wages for hours worked, and the Government and employer contributions for hours not worked. The government’s expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.
HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred.
Employers must agree on the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing in accordance with employment law. This agreement must be made available to HMRC on request. The intention is that employees will be informed by HMRC directly of full details of the claim.
Overall, the JSS will provide some relief to employers and employees. However, the scheme does not go as far as many have hoped and in many cases, it will not be enough to protect jobs from the threat of redundancy.
This article has been produced for general information purposes and further advice should be sought from a professional advisor. Please contact our Employment team at Cleaver Fulton Rankin for further advice or information.