This Q&A was written on 29 September 2020 and last updated on 26 October 2020. It will be updated from time to time as more information becomes available. Please note that this document does not constitute the giving of legal advice – this is intended to be a guide to the issues employers will need to consider and is not a substitute for taking specific legal advice as situations are likely to be fact specific.
1. What is the Job Support Scheme (JSS)?
This is a new scheme introduced by the Government which commences on 1 November 2020 directly after the end of the furlough scheme and will extend to 30 April 2021. The Government will review the terms of the scheme in January 2021.
The JSS is split into two parts and provides different types of support to businesses according to their situation.
Businesses that are operating but facing decreased demand can get support for wages through JSS Open.
Businesses 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 get support through JSS Closed.
An employer can claim the JSS Open and JSS Closed grant at the same time for different employees. An employer cannot claim for a single employee under both schemes for the same day.
The Policy Paper titled “The Job Support Scheme” published on 22 October 2020 can be found at the following link:
https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme
2. What is the JSS Open?
For employers that can operate safely, but where they face decreased demand, JSS Open will give eligible employers the option of providing employees with shorter working hours rather than making redundancies.
The employee will need to work a minimum of 20% of their usual hours, for which the employer will pay them as normal. The employee will then also receive 66.67% of their normal pay for any unworked hours made up of:
- Paid for by the employer – 5% of reference salary for unworked hours, up to a maximum of £125 per month (with the discretion to pay more if the employer wishes);
- Paid for by the government – 61.67% of reference salary for unworked hours, up to a maximum of £1,541.75 per month.
Accordingly, employees will receive at least 73% of their normal wages, where they earn £3,125 a month or less.
3. What is the JSS Closed?
For employers who are forced to close their premises due to coronavirus restrictions set by one of the four governments of the UK, JSS Closed can be utilised in respect of wage costs of employees who have been instructed to cease work in eligible (closed) premises.
Under JSS Closed, the employee can receive two thirds of their normal pay, up to a maximum of £2,083.33 per month. Employers will make the payment to the employee which will be fully funded by the government. Employers will not be required to contribute to the employee’s pay (although they can voluntarily top it up) and will only be required to cover employer Class 1 NICs and auto-enrolment pension contributions.
Employers will be eligible to claim if they are subject to the restrictions and employees are off work for at least 7 consecutive days. It will not cover wages where a business is forced to close, by local public health authorities, because of a specific workplace outbreak of Coronavirus.
4. How can employers claim under the JSS?
Employers will be able to claim under the JSS in arrears from 8 December 2020. Payments will be made after the claim has been approved.
The latest guidance states that further guidance on the steps employers must take to calculate and make a claim under the JSS will be published by the end of October 2020.
5. Can we use the JSS in respect of employees who were not furloughed?
Yes – neither the employer generally nor the particular employee involved has to have used the furlough scheme previously.
6. Who is eligible for the JSS generally?
Additional criteria apply depending upon whether the grant is being sought under JSS Open or JSS Closed. However, the following applies in respect of both parts of the JSS.
Employers:
UK Employers are eligible to use the scheme provided they have a UK, Channel Island or Isle of Man bank account and a UK PAYE scheme registered before 23 September 2020. Organisations that have staff costs that are fully publicly funded should not use the JSS.
Employees:
Employees must have been on the employer’s PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. This means an RTI Full Payment Submission notifying payment in respect of that employee must have been made to HMRC at some point within this time period.
Claims can be made in respect of employees who ceased employment after 23 September 2020 and were subsequently rehired.
An employee in this context is any individual treated as an employee for Income Tax purposes. This will include those on zero hours or temporary contracts. Agency workers may be regarded as employees of an employment agency.
7. Who is eligible for the JSS Open?
In additional to the general criteria the eligibility to claim under JSS Open will depend on the size of the employer, measured as at 23 September 2020.
Small and medium sized businesses with less than 250 employees will be eligible provided some or all of their employees are working reduced hours (subject to the minimum requirement to work at least 20% of usual hours).
Large employers with 250 or more employees will be eligible if they meet a financial impact test demonstrating that their turnover has remained equal or fallen to show that they have been adversely affected by coronavirus. The test only needs to be taken once before the employer’s first claim for the grant under the JSS Open. Employers who are registered with a UK charity regulator or are exempt for such registration are eligible for the JSS Open without being required to carry out the financial impact test.
The financial impact test is complex. The relevant periods for the purposes of determining the impact on turnover will depend on the frequency at which the employer submits VAT returns. Further information on the financial impact test and examples can be found within the government guidance at:
https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme
The grant can be claimed for in respect of employees working a minimum of 20% of their usual hours. Employees can do training in working hours while being claimed for under the JSS but those hours spent training are paid for by their employer at the full rate of pay and will not be regarded as unworked hours. These hours spent training will count towards the 20% of usual hours requirement. For JSS Open, at least minimum wage rates must be paid for all hours worked or treated as worked.
To be eligible for the grant the employer must have reached written agreement on a temporary working arrangement covering at least 7 consecutive days. See further details in question 8 below.
8. What do we need to do to implement the JSS Open?
Employers will need to agree the shorter hours temporary working arrangement with employees and confirm changes in writing. Where relevant terms are determined by collective agreement written collective agreement with the trade union must be reached. This agreement must be available to HMRC on request and should be kept on record for 5 years. Records will also need to be maintained to show how many hours the employees work and the number of usual hours they are not working.
The temporary working arrangement must cover at least seven consecutive days.
As with any change to terms and conditions of employment, legal advice should be obtained. It may be necessary for employers to consult with their employees to reach agreement to the changes to terms required to implement the short-time working arrangements and, where 20 or more employees are affected, consideration should be given to the need to collectively consult for the minimum period of 30/45 days.
Our customers can access a template letter on the ESPHR Customer Zone for the purpose of satisfying the requirements for the written agreement in relation to JSS Open. The latest guidance states that HMRC will publish further guidance on what to include within the written agreement by the end of October 2020 and therefore the template letter we have created may be subject to change as further details are published by the government.
9. How do we decide which employees to put onto short-time working under the JSS Open?
Employers must ensure that decisions in relation to short-time working arrangements are not based on discriminatory criteria, except where such discrimination can be objectively justified. It may be necessary to determine which employees are to be placed on which short-time working arrangements using a method of objective selection criteria applied to the employees.
10. Who is eligible for JSS Closed?
Those businesses who are eligible for the JSS and who, as a result of restrictions set by one or more of the four governments in the UK, have been legally required to close their premises (at one or more locations) for at least 7 consecutive days. The requirement for premises to close includes those premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/or drinks outdoors. Businesses that are required to close by local public health authorities as a result of specific workplace outbreaks are not eligible.
Employers are only eligible to claim for periods during which the relevant coronavirus restrictions are in place. JSS Closed grants cannot cover periods after restrictions have lifted and the business premises is legally allowed to reopen, although JSS Open may apply in that situation.
The JSS Closed grant will be available in respect of those employees whose primary place of work is the premises that have been legally required to close and that employee has been instructed to and actually ceased work for a minimum period of at least 7 consecutive calendar days. Further details are expected and the latest guidance confirms that the above is not the complete list of eligibility requirements and further guidance on JSS Closed will be published by the end of October 2020.
There is no financial impact test requirement for large employers using the JSS Closed but the Government states it expects that large employers using the scheme will not make capital distributions, such as dividend payments or share buybacks whilst accessing the grant.
11. What do we need to do to implement JSS Closed?
Employers will need to make changes to the employment contract by written agreement after discussion with the employees.
The agreement should record that the employee has been instructed to and agreed to stop working for a minimum of 7 consecutive calendar days. Where relevant terms are determined by collective agreement written collective agreement with the trade union must be reached. This agreement must be available to HMRC on request and should be kept on record for 5 years.
As with any change to terms and conditions of employment, legal advice should be obtained. It may be necessary for employers to consult with their employees to reach agreement to the changes to terms required to implement the short-time working arrangements and, where 20 or more employees are affected, consideration should be given to the need to collectively consult for the minimum period of 30/45 days.
12. What is the Reference Salary?
The guidance includes details of how employers should calculate an employee’s reference salary under the JSS Open. Further guidance will be issued by the end of October 2020 setting out how to calculate reference salary for JSS Closed.
Claims under JSS Open are subject to a maximum reference salary of £3,125 per calendar month (with the government’s contribution covering up to a maximum of £1,541.75 per month, depending on the hours worked).
The JSS Open reference salary is made up of the regular payments that the employer is obliged to make to the employee, including:
- Regular wages
- Non-discretionary payments for hours worked, including overtime
- Non-discretionary fees
- Non-discretionary commission payments
- Piece rate payments
Calculations of reference salary cannot include payments made at the discretion of the employer or a client, where the employer or client was under no contractual obligation to pay, including:
- any tips, including those distributed through troncs
- discretionary bonuses
- discretionary commission payments
- non-cash payments
- non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay.
For employees who are paid a fixed salary, the reference salary is the greater of:
- the wages payable to the employee in the last pay period ending on or before 23 September 2020
- the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme
For employees whose pay is variable, the reference salary is the greater of:
- the wages earned in the same calendar period in the tax year 2019 to 2020
- the average wages payable in the tax year 2019 to 2020
- the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020.
13. What are Usual Hours?
The JSS Open can be used by eligible employers in respect of employees who work at least 20% of their usual hours. The guidance explains that usual hours in this context will be calculated differently depending on whether an employee’s contractual hours are fixed or variable.
Fixed contracted hours – where the employee is contracted to work a fixed number of hours and their pay does not vary according to the number of hours they work, usual hours will be calculated based upon the greater of:
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
- the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention scheme (NB. if employees moved to part time working, this may be varied – full details will be included in forthcoming Guidance)
This should include hours paid as annual leave and statutory leave.
Variable hours – where the employee is either (i) not contracted to a fixed number of hours, or (ii) their pay depends on the number of hours they work, a different calculation applies to determine usual hours.
For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the higher of:
- the number of hours worked in the same calendar period in the tax year 2019 to 2020
- the average number of hours worked in the tax year 2019 to 2020
- the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020
This should include hours paid as annual leave and statutory leave.
The calculation of usual hours is not and cannot be altered if the employee is expecting to work more or fewer hours than this in the future.
For employees who are part of a flexible work time arrangement, employers should:
- not count as hours worked any hours that the employee worked but was not paid for because they accrued paid time off which they could take later
- count as hours worked any hours that the employee took as paid time off (‘flexi-leave’), which they had accrued by working additional hours at some other time
For employees who are paid per task or per piece of work done whose hours cannot be calculated in this way, hours can be estimated based on the number of ‘pieces’ produced and the average rate of work per hour, as per National Minimum Wage rules.
Full rules will be covered in guidance at the end of October.
The existing guidance contains a number of examples to assist employers with the calculation of usual hours.
14. Can I delay paying my employees until receipt of the grant payments?
No, employers must have paid the full amount claimed for an employee’s wages to that employee (and also pay the associated tax and NICs) before a claim is made.
The JSS prohibits employers from entering into any commitment or transaction with employees that would reduce wages below the amount claimed (for example a salary sacrifice scheme). This does not prevent employers making deductions from salary that have been authorised by the employee, which can continue to be made while the employee is working reduced hours, provided these deductions are not administration charges, fees or other costs in connection with the employment.
Employers may experience cashflow difficulties as a result of having to make the payments before the grants are received.
15. What about tax, NICs, pension contributions and other deductions?
JSS grants will not cover National Insurance Contributions (NICs) or pension contributions, these remain payable by the employer.
Income Tax and NICs are payable on the full amount that is paid to the employee, including any amounts that will be subsequently met by the grant payments. These payments must be reported via a Full Payment Submission to HMRC on or before the pay date in the normal way.
Employers and employee pension contributions must still be paid in accordance with the applicable pension scheme terms (unless the employee has opted out or stopped saving into their pension).
Student Loan deductions and the Apprenticeship Levy, if applicable, must still be paid.
16. How are payments made under the JSS?
Government payments of the grants will be made in arrears, reimbursing the employer for the Government contribution. Employers will be able to claim from 8 December 2020 covering salary for pay periods ending and paid in November 2020.
Claims will be submitted online in a similar way to under the CJRS. Further details of the claim process and online portal will be provided by the end of October 2020. As before, agents who are authorised to do PAYE online for employers will be permitted to claim on their behalf.
17. Can employers top up the wages to 100%?
Yes, it is now clear that employers can top up an employee’s pay (in full to 100% or in part) if they wish.
18. Can employees’ hours vary under the JSS Open?
Yes – as long as the employee works at least 20% of their usual hours, the actual hours worked can vary from week to week. Each arrangement must cover a minimum period of seven days.
Employees will be able to “cycle on and off the scheme” and will not have to work the same pattern each month, but each short-time working arrangement must cover at least seven days.
19. What is short-time working in the context of the JSS Open?
This is not the same as statutory short-time working. Short-time working in the context of JSS Open means reduced hours compared with the employee’s usual working hours. Usual hours will be based on the employee’s pre-furlough working hours (for those who are coming off furlough to take part in the JSS). We await further detail of how “usual hours” will be determined for casual or zero hours workers, although this is likely to be similar to the methodology used under the CJRS for furlough.
20. Can employers make employees redundant while making claims under the JSS?
Employers can’t use either scheme if they have already given notice of redundancy. Additionally, they can’t make employees who are on either scheme redundant during the period while claiming the grant. Employees would need to be removed from the respective scheme before they are made redundant. We anticipate that this will also mean that redundancy consultation cannot take place whilst on the JSS as the scheme is intended to avoid redundancies, and so to carry out consultation during this period could mean that HMRC could claw back any grant paid during this period. However, we await the full guidance.
21. Can employers access the JSS while making capital distributions?
Technically yes. However, the guidance states that the government expects that large employers (250 or more employees) and their corporate groups using the scheme will not make capital distributions whilst claiming the grant. Capital distributions include dividends, charge, free or other distribution or in the case of partnerships any equivalent payment made to partners.
As a result, claims for the grant in such circumstances are discouraged but not prohibited.
22. What happens if my furloughed employee’s pay period overlaps the changeover between CJRS and JSS?
There will be occasions where an employee’s pay period includes both (i) eligible amounts to be claimed under the Coronavirus Job Retention Scheme (CJRS) for a period where they were furloughed until 31 October 2020 and (ii) eligible amounts to be claimed for under the JSS in respect of periods from 1 November 2020. In this case the amounts that the employer can claim under each scheme should be calculated separately following the guidance for each scheme and take into account the number of days that fall into each scheme period. No amount of gross pay should be included in more than one scheme.
Calculated amounts must then be claimed separately under each applicable scheme i.e. using both the CJRS and the JSS online claims portals.
23. What about the Job Retention Bonus, can I claim this too?
Yes. This will be available to employers who also use the JSS Open and/or JSS Closed. Details of the Job Retention Bonus can be found at the following link:
https://www.gov.uk/government/publications/job-retention-bonus/job-retention-bonus
Grants claimed under the Job Support Scheme can be used by employers to pay an employee’s wages and help meet the Lower Earnings Limit of the Job Retention Bonus.
24. What happens if you have 20% of work available but you cannot make the payments under the JSS?
Employers are not required to use the scheme. If there is a business case that evidences they are unable to participate in the scheme for financial reasons then the alternative will be to make redundancies. Alternatively, it may be possible to agree to lay-off, short-time working, reduced hours and/or a period of unpaid leave as a short-term measure to avoid redundancy if you believe that business will improve in the near future.
25. What happens if you cannot find enough work for employees to make up 20% of their hours?
As above, employers are not compelled to use the scheme. Employers in this situation may need to consider negotiating lay off terms with staff or consider redundancies. Alternatively, an employer may be able to agree reduced working hours with employees that do not meet the criteria for the JSS Open but allow jobs to be retained.
It is currently unclear whether the requirement to work a minimum of 20% of hours must be satisfied for each 7 day period or whether the 20% requirement can apply to longer reference periods and allow hours in any specific 7 day period to drop below this level. For the time being, until further clarification is provided, we recommend that employers assume that the requirement is that a minimum of 20% of usual hours must be provided for each 7-day period.
26. Can employees undertake training while claims are being made in respect of them under JSS Open?
Yes. Employees can undertake training during worked hours, time spent training will be paid for by the employer at the normal rate of pay and will count towards the minimum 20% working hours requirement.
Employees can also voluntarily undertake training during unworked hours. Where such training attracts a minimum wage entitlement in excess of the JSS grant payment the employer will need to ensure that the employee is paid at least the minimum wage entitlement.
27. What happens if an employee going through redundancy consultation says you should consider putting utilising the JSS to avoid a redundancy?
If you can offer the work and it is financially feasible for the business to use the JSS Open then this should be considered as a way of retaining the role. If your premises are closed but you are unable to use the JSS Closed or if it is not possible to find some work for the employee then employers should ensure that their business case for redundancies adequately covers the fact that these considerations have been taken into account and are not viable for defined reasons.
Provided alternatives to redundancy have been properly considered (and documented) an employer will not be prevented from fairly dismissing an employee for redundancy, following a fair procedure. In some situations, it will be apparent that a genuine redundancy situation exists and it is not possible to avoid redundancy.
28. How are mistakes and fraudulent claims going to be dealt with?
If HMRC suspects a claim to be ineligible payments may be withheld.
Where a claim contains incorrect information, the employer must repay any overpayment to HMRC. In cases where a grant claim is found to be fraudulent the full amount of any grant must be repaid and penalties of up to 100% of the amount overclaimed may be applied. In addition, HMRC may publish the details of employers who are charged a penalty because of a deliberately incorrect claim.
The public can report fraud to HMRC if they have evidence to suggest an employer is abusing the JSS. HMRC will publish the names of employers who have accessed the JSS grants and individual employees can sign up on GOV.UK to access their Personal Tax Account and check if their employer has made a claim relating to them.
