The coronavirus pandemic now appears to be in its second wave, with the highest number of confirmed cases to date in the UK occurring on 22 October 2020. Against that background, in the House of Commons on 22 October 2020, the Chancellor announced that the Job Support Scheme (JSS) is to be more generous than previously set out.
The JSS is being introduced from 1 November 2020 as a successor to the Coronavirus Job Retention Scheme (CJRS), which ends on 31 October 2020 to support the “fragile” economic recovery, particularly given recent and tighter local and national restrictions.
The scheme will be open to employers across the UK, even if they have not previously used the CJRS furlough scheme. Here we set out the details of the Job Support Scheme, the different variations of it, and which employers will be able to access the support it provides.
The JSS will run for six months from 1 November 2020, and has two variants: the ‘JSS Open’ and the ‘JSS Closed’.
The JSS Open is available to support many organisations that are operating, but facing decreased demand. Whereas organisations that are legally required to close their premises as a direct result of coronavirus restrictions (set by one or more of the four governments of the UK) can claim through the JSS Closed.
See below for details of the level of support the JSS Open and JSS Closed each provide.
Employers will be able to access the JSS if:
Additional eligibility criteria applies depending on whether the employer is claiming a JSS Open grant or JSS Closed grant. See below for details.
Organisations that have staff costs that are fully publicly funded (even if they are not in the public sector), should use that money to continue paying their staff, and not use the JSS.
Organisations can use the scheme if they are not fully funded by public grants, for the proportion of their revenue disrupted due to coronavirus.
Eligible employers will be able to claim the JSS grant for employees who were on their PAYE payroll between 6 April 2019 and 23:59 on 23 September 2020.
This means a Real Time Information (RTI) Full Payment Submission notifying payment in respect of that employee must have been made to HMRC at some point between 6 April 2019 and 23:59 23 September 2020.
If employees ceased employment after 23 September 2020 and were subsequently rehired, then employers can claim for them. Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
Employees do not need to have been furloughed under the CJRS to be eligible for the JSS, and employers can claim both the JSS and the Job Retention Bonus in respect of the same employee.
However, employers cannot claim both JSS Open and JSS Closed in respect of a single employee for the same day.
An individual is an employee for the purposes of this scheme if they are treated as an employee for Income Tax purposes.
The JSS Open will provide government funding towards the wages of employees who are working reduced hours due to the pandemic.
For the JSS Open, employees will only be eligible if they work at least 20% of their usual hours.
The scheme will work as follows:
This means that employees who work just 20% of their usual working hours, would only see a reduction of less than 27% of their usual pay (providing that their usual monthly pay is not more than £3,125).
Employers cannot claim for the associated employer National Insurance Contributions (NICs) or employer pension contributions, but they must still pay these amounts.
In addition to the eligibility criteria set out above, there are also other criteria that need to be met.
The JSS Open is available to all small and medium sized employers. However, large employers – those with 250 or more employees on 23 September 2020 – will need to demonstrate that their turnover has remained equal or fallen due to coronavirus to be eligible to claim (the ‘Financial Impact Test’).
The Financial Impact Test works as follows:
Total sales figures on their VAT return (box 6) for three consecutive months which are due to be filed and paid by 7 November 2020 versus total sales figures from the same period in 2019.
They will need to have submitted a VAT return between 31 August 2020 and 7 November 2020 to be eligible.
Large employers who are part of a VAT group will need to use the turnover figures for the VAT group for the purposes of the Financial Impact Test.
Any charity with 250 or more employees that is registered with a UK charity regulator or are exempt from such registration will not be required to carry out the test and are eligible for this scheme, regardless of their level of turnover.
The government expects that large employers (and their corporate groups) using the JSS will not make capital distributions whilst claiming grant. This includes dividends, charges, fees or other distributions, or any equivalent payment that a partnership may make to its partners).
The JSS is available to employers that have been legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK.
For each employee who cannot work due to these restrictions, the employer will be able to claim two thirds (or 67%) of their usual pay, up to a maximum of £2,083.33 per month. The employer can pay more than this if they wish.
This means that someone who usually earns £1,500 per month will still receive £1,000, despite not working for the whole month.
Employers are eligible to claim the JSS Closed if their business premises at one or more locations has been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK (but not by local public health authorities).
Employers are only eligible to claim for periods during which the relevant coronavirus restrictions are in place, although they may be able to claim under the JSS Open scheme for periods before or after the restrictions are place.
Eligible employers will be able to claim the JSS Closed grant for employees:
Employers must pay the full amount claimed to the employee in wages before each claim is made.
Determining an employee’s usual pay (the ‘reference salary’) and usual working hours will depend on whether the employee has fixed pay or variable pay.
The reference salary is the greater of:
Similarly, employees who are contracted to work a fixed number of hours, their usual hours are the greater of:
However, the government are expected to publish more details on this calculation if an employee has moved or moves to part time working.
The variable hours calculation will apply if either:
If the employee works variable hours, the usual hours will be the greater of:
This should include hours paid as annual leave and statutory leave.
There are also separate rules for employees who are paid per task or per piece of work done.
Claims for periods from 1 November will be made online from 8 December and the process is likely to be similar to that for the CJRS. Subsequent months will follow a similar pattern.
Grants will be payable in arrears, on a monthly basis, meaning that 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.
HMRC will check claims. Grants 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. 100% penalties can be applied where appropriate.
Employers must agree the new short-time working arrangements with their employees, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request.
It is important that all claims are valid and are calculated in accordance with the guidance. HMRC will likely have all of the same powers as they have in traditional compliance checks, as well as the powers and penalties associated with the CJRS, including criminal powers for fraudulent claims.
Further details on the JSS are expected to be published by the end of October.
We can assist with all stages of the calculation and claim process for JSS, summarised into four key areas.
We would also be very happy to partner with your employment lawyers to help collate the information you will need to make claims and agree the change of status with employees.
If you have any questions or would like any assistance with the JSS, please speak to your usual Crowe contact.
Rishi Sunak has also announced other measures as part of the government’s ‘Winter Economy Plan’, this includes the following.
New grant scheme – Announced on 22 October, a new grant scheme under which the government will fund local authorities to enable them to make direct cash grants where they believe they are most needed in hospitality, leisure and accommodation sectors. Grants of £2,100 per business will be available for those in tier 2, up to £3,000 available for businesses who have been legally required to close. The grants can be backdated to August where businesses have been operating in areas with enhanced restrictions.
Expanded Job Support Scheme – on 9 October 2020, the Chancellor announced an expansion of the Job Support Scheme for business who are forced to close their premises as a result of local or national lockdown restrictions. This scheme will cover 67% of wages for employees for periods where they are unable to work. More details can be found in our article here.
Self-Employed Income Support Scheme (SEISS) – as part of the announcements on 22 October, the government is extending the SEISS scheme to cover up to 40% of average monthly profits, up to a maximum of £3,750. This will be available for three months (November 2020 to January 2021). A second additional grant will also available from February to April 2021, with the level of this grant being set in due course.
Bounce Back Loans (BBL) – a new ‘Pay As You Grow’ repayment system will be introduced to offer greater flexibility for businesses paying back these loans. This includes extending the loans from six to 10 years, as well as interest-only repayment periods of up to six months and payment holidays. Applications have been extended up to 30 November 2020.
Other loan schemes – the Coronavirus Business Interruption Loan Scheme (CBILS) can also be extended up to 10 years. The applications for all COVID-19 loan schemes (CBILS, CLBILS BBL and Future Fund) will be extended until 30 November 2020.
Tax deferrals – businesses who deferred their VAT bills as part of the previous support package will be able to spread the deferred VAT over eleven months over the 2021-22 financial year, rather than in one lump sum in March 2021.
Tourism and hospitality – the reduced rate of VAT of 5% on tourism and hospitality will remain in place until 31 March 2021.
For more information on all of the government’s support measures, visit our funding flowchart.
While the measures will not be able to support every business, the government’s Winter Economic Plan is welcome news for many organisations struggling with reduced demand due to COVID-19 and will provide welcome support for many through the winter months.
If you have any questions or would like any assistance, please speak to you usual Crowe contact.