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Markel Insurance

27 Oct 2020

The Job Support Scheme: How can it help employers?

The new Job Support Scheme commences in November and remains in place until May 2021.  In this article, we look at the scheme and consider how it may benefit employers who have experienced a downturn in work due to the coronavirus pandemic.

An Overview

From November 2020, the Coronavirus Job Retention Scheme (furlough) is replaced by the Job Support Scheme (‘the JSS’). The JSS consists of ‘the Job Support Scheme Open’, for businesses that remain open but whose income has reduced due to the coronavirus pandemic and ‘the Job Support Scheme Closed’ for businesses that are temporarily required to close due to Government coronavirus restrictions. The JSS will remain in place for six months, until May 2021.

In response to the economic impact on businesses of increased coronavirus restrictions, on 22 October, the Chancellor announced significant changes to the standard JSS (now renamed ‘Job support Scheme Open’) and increased financial support for impacted employers. When the JSS was originally announced on 24 September, the JSS required employees to work a minimum of 33% of their normal hours. This minimum threshold has now been reduced to 20% of normal hours.

Additionally, the required minimum employer contribution to the unworked hours has been significantly reduced from 33% (as originally announced) to 5%, with the Government JSS grant now increased to 61.67% of wages for normal hours not worked, rather than restricted to a third of unworked hours, as previously announced. The cap to the Government grant towards unworked hours has been increased to £1541.75 per month, based on UK median income (previously, the cap on the Government grant for unworked hours was £697.92 per month).

This means that the employee will receive up to two-thirds of their normal pay for their unworked hours.

Eligibility

Employers

Employers with a UK bank account and a UK PAYE scheme can claim the JSS grant. The employer does not need to have previously used the Coronavirus Job Retention Scheme, i.e. furloughed staff.

All small and medium-sized businesses are eligible to apply. They do not need to show that their income has fallen. Larger businesses (with 250 or more employees) are eligible only where they are able to demonstrate to HMRC via a financial assessment test that their turnover has fallen.

Fully publicly-funded organisations are “not expected” to use the JSS, but partially publicly-funded organisations are eligible in respect of private revenues which have been affected.

Payments to eligible businesses will be made monthly in arrears through the Gov.uk online portal from 8 December 2020.

Employees

Employees will need to have been employed and on the employer’s PAYE payroll as of 23 September 2020. 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.

Importantly, the employee must not be on a redundancy notice to be eligible for the scheme.

What are the benefits to the employer?

Flexibility - subject to minimum seven-day claim period

Where the other eligibility criteria are met, the only remaining requirement is that the minimum claim period is seven days, so that employees can be taken on and off the scheme.  Employers have flexibility regarding employees’ various hours in the different grant periods, subject to the terms of the employee’s contract, provided the claim period is at least seven days.

The benefits of retaining staff

Employers will need to consider whether using the JSS is suitable for their circumstances and carry out their own financial analysis in determining this. 
In carrying out this exercise, employers should also consider the benefits in retaining staff when weighed against the alternative of carrying out redundancies, including a consideration of the following factors:

  • the cost of redundancy payments

  • the potential litigation risk in making staff redundant should employees challenge this decision in the employment tribunal

  • having a sufficient number of staff in place for when business picks up again

  • recruitment  and training costs if replacing lost staff in future

Where the employer determines that the JSS is not suitable and has reduced work available, it may be able to agree with their staff periods of short-term working (i.e. working on reduced hours for reduced salary on a temporary basis) or part-time working outside the JSS, so that the employer is not required to contribute towards unworked hours, with the exception of statutory guarantee payments in respect of short-time working.

The Job Support Scheme Closed

In response to increased coronavirus restrictions, on 9 October, the Chancellor announced an extension to the Job Support Scheme (which has since been renamed as ‘Job Support Scheme Closed’), which also beings on 1 November.
The extension applies to any business in the UK legally required to close their premises due to local or national coronavirus restrictions that apply in the UK and includes premises restricted to delivery or collection-only services from their premises. In that situation, the Government will pay a grant equating to two-thirds (67%) of their eligible employees’ normal pay, up to a maximum of £2,083.33 per month.

Under ‘Job Support Scheme Closed’, employers will not be required to contribute towards employees’ wages during the claim period and will only be required to pay employee National Insurance Contributions and automatic enrolment pension contributions.

Businesses will only be eligible to claim the grant while they are subject to local or national restrictions which require their businesses to temporarily close and in respect of those employees whose primary place of work is at the temporarily closed premises.

To be eligible for the grant under ‘Job Support Scheme Closed’, employees must be instructed to temporarily cease all work due to the restrictions and must remain off work for a minimum of seven consecutive days. In other words, this does not apply to employees who are carrying out some, but reduced work due to coronavirus restrictions. Those employees may be eligible for the ‘Job Support Scheme Open’ set out above.

For further advice about furlough and the Government’s economic response to COVID-19, please contact Hannah Thomas or call us on 0371 705 4006.

Our COVID-19 Hub contains a range of information and resources to best support our clients during this difficult time. To receive the latest news and insights by email sign-up here.

This page will be regularly updated as new information becomes available.

Next article in series

23 Oct 2020

Job Support Scheme: What are the facts?