What is the new Scheme?
The new Job Support Scheme is a type of wage subsidy scheme that aims to support employers affected by COVID-19 to bring people in viable jobs back to work following furlough or retain people in work who have not been furloughed, by agreeing with those employees that they will work fewer hours and accept a pay reduction.
This enables the employer to reduce its employment costs, both through the employee agreeing to accept reduced hours and pay temporarily, and the employer receiving a grant from the Government. The hope is that this means that employers will be able to keep more employees in employment whilst the COVID-19 pandemic is ongoing through the winter months. The Scheme offers employers an alternative to other measures that may be under consideration, such as redundancies.
When does it start and finish?
The Scheme starts on 1 November 2020, which is immediately after the furlough scheme ends on 31 October, and it is currently planned to run for six months, ending on 31 April 2021.
What does the JSS provide?
The below is an infographic from the HM Treasury.
The key points are as follows:
- The employee must work at least 33% of their normal (pre-furlough) hours and the employer will pay the employee full pay for these hours;
- The remaining unworked hours are then split three ways:
- 1/3 of these unworked hours are unpaid;
- 1/3 of these unworked hours are paid by the employer at the normal rate;
- 1/3 of these unworked hours are funded through the JSS, subject to a cap of £697.92.
- The employee will receive at least 77% of normal pay from the employer;
- The employer’s contribution to the employee’s salary will be at least 55% of normal pay;
- Employers must also pay employer National Insurance Contributions and pension contributions;
What if the business has to close due to government restrictions?
From 1 November, the extended Job Support Scheme will pay people who can’t go to work because their business is closed under ”very high” Tier Three coronavirus restrictions. The government will pay 67% of wages – up to a maximum of £2,100 a month – for each employee. Staff must be off work for a minimum of seven days to be eligible, and their employer doesn’t have to pay towards their salary. Employers will still have to pay workers’ national insurance and pension contributions.
Which workers does it apply to?
Employees must be on the employer’s PAYE payroll on or before 23 September 2020 in order to qualify for the Scheme. 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.
Employees must be on reduced hours and work a minimum of 33% of their normal hours for the first three months of the Scheme. After three months, the Government will consider whether to increase this minimum hours threshold. The new Scheme is open to all employees that meet these criteria, even if they were not previously furloughed.
The intention is that employees will be able to move 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.
Which employers can use the Job Support Scheme?
Small and Medium sized Employers (SME) can benefit from the Scheme. Large businesses will have to meet a financial assessment test which measures the impact of Covid-19 on turnover before being able to make applications under the Scheme. An SME is likely to be defined as an organisation which meets two out of the following three criteria: turnover of less than £25m, fewer than 250 employees, and gross assets of less than £12.5m.
What happens if employees work more than a third of their normal hours?
The table below is from the HM Treasury website:
|Hours Employee Worked||33%||40%||50%||60%||70%|
|Hours Employee Not Working||67%||60%||50%||40%||30%|
|Employee Earnings (% of normal)||78%||80%||83%||87%||90%|
|Government Grant (% of normal)||22%||20%||17%||13%||10%|
|Employer Cost (% normal wages)||55%||60%||67%||73%||80%|
How do employers claim under the scheme?
Employers wishing to claim must consult with employees, come to an agreement, and set out in writing the agreement which is reached with the employee. This agreement must be made available to HMRC on request. The intention is that employees will be informed by HMRC directly of the full details of the claim. Employers will be able to make a claim online through Gov.uk from December 2020. The grant will be paid on a monthly basis
Can a claim be made before paying the employee’s wages?
No. Grants under the Scheme will be paid in arrears, so a claim can only be submitted for a given pay period after payment has been made to the employee and that payment has been reported to HMRC via an RTI return. Grants can only be used as reimbursement for wage costs actually incurred.
What about employees who are being made redundant?
Employees cannot be made redundant or put on notice of redundancy during the period for which their employer is claiming a grant for them under the Scheme.
Can employers top-up employee wages?
No. Unlike the Furlough scheme, the Job Support Scheme states the Government “expectation is that employers cannot top up their employees’ wages above the two-thirds contribution to hours not worked at their own expense”.
What about the Job Retention Bonus?
Employers can still claim the Job Retention Bonus for employees they bring back from furlough who are then put on the new Scheme if they meet the eligibility criteria. The Job Retention Bonus pays £1,000 per furloughed employee that is brought back to work and kept on until at least the end of January 2021.
What does this mean for employers?
Whilst the new Scheme is less generous than the Furlough scheme which comes to an end on 31 October, it does provide welcome further support for employers who are facing ongoing difficulties as a result of the pandemic. The purpose of the scheme is to enable employers to retain more jobs through the current crisis. However, it may not help save jobs in industries that are currently closed and have no work for employees to do. Clinically vulnerable people who are not able to do their jobs from home but are also unable to go into the workplace to work may also not benefit under the Scheme.
A further point that employers will need to consider is that it may be more expensive for the employer to use this Scheme than other alternatives. For example, it may be more expensive for the employer to have two employees working under this Scheme than making one employee redundant and retaining the other.
Some employers may also be able to negotiate reduced working hours with their employees which do not involve the employer contributing additional financial support for the unworked hours.
Is the Scheme an alternative to redundancy?
Employers have a duty to consider alternatives to redundancy throughout the process. Therefore, employers who are considering redundancy or already consulting on redundancy should consider whether using the Scheme could reduce the number of those affected by redundancy. Even where a redundancy dismissal has already taken place and the employee has appealed against that decision, the employer should consider whether the Scheme changes their decision. Even if the employer decides that it does not, they should document that they have considered the potential financial impact of the Job Support Scheme funding on their redundancy decision. This could become a key document in defending any future unfair dismissal claim.
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Justin deals with all aspects of Dispute Resolution for both businesses and individuals, including including Contentious Probate, Employment Law (for both businesses and individuals) and Commercial Litigation. This means that he is familiar with the many different courts and tribunal as well as the many different methods for resolving disputes, including alternative dispute resolution such as adjudication and mediation.