The Job Support Scheme – what we know so far

Are there any eligibility criteria?

The current Coronavirus Job Retention Scheme (CJRS) will come to an end on 31 October 2020. The new Job Support Scheme (JSS) will commence from 1 November 2020 and will run for 6 months until 30 April 2021. The scheme aims to help businesses keep employing people on shorter hours rather than making them redundant.

Whilst the detail of the scheme will no doubt evolve over time, in brief the scheme details we know of so far, are:

  • Businesses do not need to have furloughed employees under the CJRS for employees to be eligible for the Job Support Scheme.
  • The scheme provides effectively a ‘short time working’ arrangement, but differs from the traditional short time/lay off option in that employers must provide work (and pay) to the employee for at least 33% of their normal working hours and must cover the cost of one third of the unworked time.
  • After the first three months, the Government will consider whether to increase this minimum hours threshold above 33%.
  • For the hours worked, employers must pay each employee their normal rate of pay (pre furlough).
  • For the unworked hours, the employer and the government will each make a contribution of one-third of the employee’s usual pay so that the employee will receive two thirds of normal pay for the unworked proportion of their working week.
  • The government’s contribution will be capped for each employee at £697.92 per month. This has an implication for higher earners, although the employer’s third is uncapped.

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  • The Job Support Scheme can also be applied to those currently working reduced hours.
  • Eligible businesses will still be able to claim the £1,000 grant for each employee that was furloughed under the CJRS, providing they are still employed at 31 January 2021.
  • HMRC will reimburse the employer for the Government’s contribution. Employers will be able to make a claim online through Gov.uk from December 2020 and will be paid monthly. Grants will be payable in arrears: a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
  • The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
  • HMRC’s intention is that employees will also be informed by HMRC directly of full details of the claim.

Are there any eligibility criteria?

For an employer…

  • If you are a small or medium-sized (SME) organisation you will automatically be eligible for the scheme. We anticipate that the definition of SME will be based on the Companies Act definition, requiring two out of the following three criteria to be met.
    • Turnover of less than £25 million
    • Less than 250 employees
    • Gross assets less than £12.5 million
  • If you are a ‘large’ business, you would need to demonstrate that the business has been adversely affected by COVID-19. No details have been provided yet about how this will be defined in practice.

For the employee …

  • The employee must have been on their employer’s PAYE payroll on or before 23 September 2020 and an RTI submission must also have been made before that date.
  • The employee must not have been served notice of redundancy before being placed on the Job Support Scheme.

Are there any conditions?

At the time of writing we are aware of the following conditions:

  • No businesses will be able to make an employee participating in the scheme redundant (or issue notice of redundancy) whilst they are on the scheme.
  • Employees can rotate on and off the scheme, but each rotation must be a minimum of seven days.

We await further details of the scheme to understand what, if any, additional conditions will be applied.

Some examples of how the scheme would work

To give employers an idea of how the scheme would work in practice, we have provided some examples below:

  • Scenario One – half of normal hours available:

Jack normally works 40 hours a week for VHR Ltd for £2,000 per month. VHR Ltd currently only has 20 hours a week for Jack. Jack is therefore paid £1,000 per month for 20 hours worked per week.

He is then paid a total of £666.66 per month in respect of the 20 hours a week NOT worked (two thirds) £333.33 is paid by VHR Ltd plus £333.33 is claimed from the government. The missing £333.34 is what Jack must forego to make the scheme work. So, in this example, Jack gets 83.3% of his full normal pay for working 50% of his normal hours. 19.9% is paid by the government.

  • Scenario Two – two thirds of normal hours available:

Elaine normally works 39 hours a week for VHR Ltd for £9,000 per month. VHR Ltd currently only has 26 hours a week for Elaine. Elaine is therefore paid £6,000 per month for her 26 hours worked per week.

She is then paid a total of £1,697.92 per month in respect of the 13 hours a week she doesn’t work. £1,000 is paid by VHR Ltd (one third) plus another £697.92 (i.e. the capped amount) is claimed from the government. The missing £1,302.08 is what Elaine must forego to make the scheme work. In this example Elaine gets 85.5% of her normal full pay for working 66% of the hours. 9% is paid by the government.

  • Scenario Three – one third of normal hours available:

Ben normally works 30 hours a week for VHR Ltd for £1,500 per month. VHR Ltd currently only has 10 hours a week for Ben. Ben is therefore paid £500 per month for his 10 hours

worked per week. He is then paid a total of £666.66 per month in respect of the 20 hours a week he doesn’t work. £333.33 is paid by VHR Ltd (one third) and another £333.33 is claimed from the government.

The missing £333.33 is what Ben must forego to make the scheme work. In this example Ben gets 77.7% of his normal full pay for working a third of the hours. 28.5% is paid by the government.

  • Scenario Four – 20% of normal hours available:

Janine normally works 40 hours a week for VHR Ltd for £3,000 per month. VHR Ltd currently only has 10 hours a week for Janine. Janine is therefore paid £750 per month for her 10 hours worked per week. No grant can be claimed as Janine is working less than a third of her normal contracted hours.

The table below helps to understand the amounts to be paid depending on the percentage of reduced hours worked by the employee.

Job Support Scheme Tables

Some initial observations from us…

  • It is not clear how ‘usual hours’ and ‘usual pay’ will be interpreted for employees who do not work standard hours – such as zero-hour employees. Whilst we await further clarification from the Government, we believe zero-hour staff may be exempt from the scheme as their contracts are fundamentally designed to provide flexibility with no financial obligation.
  • HMRC’s expectation is that employers cannot top up their employees’ pay above the two-thirds contribution for hours not worked. We await Government clarification.
  • It is not clear how the scheme will operate in the context of holiday weeks or individual days taken as holiday. We await further guidance on this.
  • It is not clear how the scheme will work for employees off sick and in such instances whether contractual sick pay will be applied. Where contractual sick pay is SSP, we assume that any payment due would revert to SSP, but we await further guidance.
  • Employers will need to consider the pros and cons of adopting the Job Support Scheme as an alternative to the ‘grandfather’ short time working/lay off scheme. Under this original scheme, where the contractual right exists, an employer can invoke short time or complete lay off at no cost to the employer (except for the first five unworked days which would need to be paid at the Government’s Guarantee Minimum Pay rate of £30.00 per day only in any three month period).

However, whilst it is yet to be clarified, we anticipate that the right an employee has to request statutory redundancy terms (after four weeks in a row or six weeks in a thirteen week period) under the grandfather scheme will NOT apply under the Job Support Scheme.

What employers should do now …

Employers will need to consider whether the scheme is of benefit and whether it should be applied to some employees who have returned to normal working; it is not limited to just employees who are still furloughed. If the scheme is not seen as a practical option, and employees cannot return to work from furlough, then employers will need to take immediate action now.

Given the scheme still amounts to a deduction in salary, employers should continue the practice of writing to employees to seek their agreement to the deduction in pay if they wish to utilise the scheme. HMRC have made it clear that the agreement must be made available to them on request.

Employers may wish to consider approaching employees currently furloughed to explain that the current scheme is coming to an end and to establish whether employees would like to be considered for the scheme if a return to normal working is not going to be viable.

Employers would also be well advised to start preparing alternative plans including consulting about redundancy if they have not already done so.

If you would like further advice on any of the issues discussed here or payroll solutions, then email us at enquiries@verohr.co.uk

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