The Chancellor announced on 24 September 2020 the Job Support Scheme (JSS), which replaces the flexible furlough scheme. This is intended to safeguard viable jobs by providing ongoing wage support to employers, subject to certain access conditions. The JSS will run from 1 November 2020 until the end of April 2021. The furlough scheme will come to an end on 31 October 2020 as planned.
The JSS gives employers the option to keep people in work on shorter hours, rather than make them redundant.
We do not have full guidance on how the scheme will work. This has yet to be published. We will update you once we have the guidance.
Eligibility for JSS
The JSS is open to all small and medium size businesses (SMEs) with a UK bank account and UK PAYE scheme, regardless of whether they have used the furlough scheme.
Larger business will only be eligible if their turnover has fallen during the pandemic. We are awaiting further details on this. Further, the Government “expects” that larger businesses will not make capital distributions (such as dividends) while using the JSS. It is not clear if this is going to be a legal requirement.
It has not been announced whether, for the purposes of the JSS, SMEs will be those which come within the definition under the Companies Act 2006, i.e. a company is a SME if it meets two of the following requirements:
- Annual turnover of £30 million or below
- Balance sheet turnover of £18 million or below
- 250 or fewer employees.
In addition to the above, JSS can only be claimed for those employees who have been on the employer’s PAYE payroll on or before 23 September 2020. This means Real Time Information must have been submitted to HMRC on or before that date.
How it will work
An employee will need to work and be paid for at least one-third (33%) of their normal hours.
The Government has said in its factsheet that the minimum hours threshold may increase in February 2021.
It is currently unclear whether an employee must be working at least 33% of their hours every week or if this is an average over a period of a month or longer. However, the factsheet states that employees will be able to cycle on and off the scheme and do not need to be working the same pattern every month. Although each short-time working arrangement must cover a minimum period of seven days. This suggests that you may be able to move employees out of the JSS for periods that they are not working at least 33% of their normal hours. We await further guidance on this.
For the employee’s remaining hours (67%), one-third (22%) is paid by the employer and one-third (22%) by the Government. The level of the Government grant will be calculated at the level of an employee’s normal salary, capped at £697.72 per month. This means that an employee will receive at least 77% of their pay (unless pay is subject to the Government cap). The cap will impact those who earn around more than £38,000.
The employer will be reimbursed in arrears and employers will be able to make a claim for JSS online from December 2020.
The factsheet states that the grant will not cover Class 1 Employer NICs or pension contributions, although these contributions remain payable by the employer. It seems likely that an employer would need to pay these contributions not only for the hours worked, but also for the Government and the employer one third top-up.
The scheme will not be available for employees who have been given notice of redundancy. It does not appear that an employer will be prohibited from making any redundancies for the six-month period. The factsheet states that employees cannot be made redundant or put on notice of redundancy “during the period within which their employer is claiming the grant for that employee”.
This suggests an employer can start redundancy consultation and put employees at risk, whilst claiming JSS. However, an employee will need to be taken out of the JSS before an employer can issue notice of termination of employment on grounds of redundancy. Further guidance is awaited.
As with the furlough scheme, employers will need to agree new short-time working arrangements with staff and notify the employee in writing. The agreement must be made available to HMRC on request.
Employers may want to wait until the guidance is released before finalising any arrangements employees, although employers will need to balance this against the short-time frame between now and when the scheme takes effect.
If you need advice on the scheme or assistance with drafting an agreement for a change in working pattern, please contact a member of the Employment Team
This article is accurate as at 05 October 2020, but is not a substitute for legal advice. Please check our website at Ellisons Covid-19 Business Support for up to date developments.