UPDATE TO JOB SUPPORT SCHEME

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Service Dealer's SME Digest editor, Adam Bernstein, has been in touch to update readers on last week's Job Support Scheme (JSS) article, sponsored by Kramp - some of the details of which have been superseded following yesterday's announcements by Rishi Sunak.

Adam writes:

From November

In essence, the new scheme will run from 1 November 2020 for six months to the end of April 2021 unless extended. It’s not meant to be as extensive as the CJRS was, but instead, will support "viable" jobs in those businesses that are facing lower than usual demand over winter due to coronavirus.

For staff to be covered by the JSS, they will need – for the first three months at least - to be working for at least 20 percent of their normal hours and be paid by their employer for that time. The government has, however, reserved the right to increase the minimum working hours requirement after the first three months. Unlike the CJRS, firms will be unable to keep staff at home full-time and on furlough to claim financial support towards their wages – staff need to be employed and working.

As for the time an employee is not working (for no more than 80 percent of their normal hours), the government will cover around 62 percent and the employer just 5 percent of the employee's hourly wage. The government's contribution will be capped at £1541.75 per month and will be paid in arrears as a reimbursement to the employer. The employer’s contribution will be capped at £125 per month. Further, the amount paid by the government does not cover Class 1 employer national insurance contributions or any pension contributions - these remain payable by the employer.

Unless the employer is generous, employees will get nothing for the unworked time that the government and employer don’t pay under the JSS rules; they will effectively end up with around 73 percent of their normal wages.

It’s also notable that those who are on zero-hours contracts and irregular hours will be eligible for the JSS. The government says there will be "calculations for those with variable working patterns", but the details aren’t yet available and will follow in time.

Making a claim

To claim for an employee, they must have been on an employer’s PAYE payroll between 6 April 2019 and 23 September 2020. In reality, this means a Real Time Information submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.

And as for employees who have previously been furloughed, they will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough. Allied to this, it’s significant that non-participation in the CJRS is not a bar to using the JSS.

Unlike the CJRS, employers will have the flexibility to cycle employees on and off the JSS; they will not need to be working the same hours each month subject to each short time working arrangement covering a minimum seven-day period.

To take advantage of the JSS, larger businesses” will need to pass a financial assessment test first where they’ll have to demonstrate that their turnover is now lower than before coronavirus struck. A larger business is defined by the Treasury as one with 250 or more employees.

Beyond passing this assessment, there is a need for an employer to operate a UK PAYE scheme and have a UK bank account. Claims will need to be made on a monthly basis via the GOV.UK website from 8 December; payments will be a month in arrears after the employer has reported a payment under HMRC’s RTI system.

No redundancies

The whole point of the JSS is to keep employees on the payroll. This means that in contrast to the CJRS, employees on the JSS cannot be made redundant or given notice of redundancy whilst their employer is using the scheme. To an extent, this was also the case under the CJRS, but the JSS has made this patently clear. And those employers that keep staff on the books until 31 January 2021 will be able to claim £1000 per head under the Job Retention Bonus that will be paid in February 2021.

It’s quite clear that the CJRS has been misused and attacked by the criminally minded. As a result, HMRC will be checking all claims and payments may be withheld or demanded back if incorrect or fraudulent information was used. HMRC will be informing employees directly of any claims made on their behalf and one of the requirements for claiming under the JSS is the need for employers to agree new short-time working arrangements with their staff – in writing – which HMRC may ask to have sight of. Further, names of businesses using the scheme will be published.

Employees will be able to check if their employer has made a claim relating to them via their Personal Tax Account; to do this they’ll have to sign up on GOV.UK. 

In summary

The JSS is clearly evolving and may well change again in the future. Either way, the government does appear to be listening even if some suggest that it’s slow to respond. As to whether the JSS will keep employees on the payroll, only time will tell.