WARNING… this blog is super BORING! But it is information that you need to know and understand. There are decisions that you need to make about your business and consider whether the Job Support Scheme (JSS) is actually right for you.
What is the Job Support Scheme?
This scheme replaces the furlough scheme which ends on the 31st October. The new scheme aims to protect ‘viable jobs’ in businesses which are ‘facing lower demand over the winter months due to Covid-19, to help keep their employees attached to the workforce’. The scheme will open on 1 November 2020 and run for 6 months.
On the scheme the company will continue to pay its employee in full for time worked. But the cost of hours not worked will be split between the employer, the Government (through wage support) and the employee (through a wage reduction). Ultimately the employee will keep their job.
The Government will pay a third of hours not worked up to a cap of £697.92 a month, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.
- All employers with a UK bank account and UK PAYE schemes can claim the grant. However, employees must be on an employer’s PAYE payroll with the RTI submission done on or before 23 September 2020.
- Neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme
- The employee must be working at least 33% of their usual hours
- Employees will be able to cycle on and off the scheme. They 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
Things to consider
There is of course more to consider than whether you are simply eligible for the scheme. So, why would you use the scheme?
- avoid the cost of redundancy
- retain staff for when and if business picks up thereby avoiding having to train new staff
- remain flexible to deal with demand as it fluctuates (employees don’t have to work the same pattern each month).
But also think about:
- You will need to cover the hours worked but also contribute to the hours not worked. The JSS is less generous for both employers and employees than the furlough scheme. You may find it costs less to keep one or two employees on full hours and make others redundant, than to reduce the hours of these employees and claim under the JSS for all of them
- The JSS aims to protect ‘viable jobs’. If you had intended to make redundancies at the end of the furlough scheme you may need to continue with that plan. You must have enough work for the employee to work at least 33% of their usual hours. After 3 months, the Government will consider whether to increase this minimum hours threshold.
- 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
- The support is for businesses that need it most. Whilst there is no financial assessment for SME’s HMRC will check claims. Our expectation is that employers using the JSS won’t be making capital distributions such as dividend payments. If you are turning over more now than last year you should not be making a claim
- Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement, and notify the employee in writing. This agreement must be made available to HMRC on request. Employees will be informed by HMRC directly of full details of the claim
- Grants will be payable in arrears. This means that a claim can only be submitted after payment to the employee has been made and that payment has been reported to HMRC via an RTI return
- Grants can only be used as reimbursement for wage costs actually incurred. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information.
Here is an example of how we understand JSS will work:
Beth normally works 5 days a week and earns £350 a week.
Her company is suffering reduced sales due to coronavirus. Rather than making Beth redundant, the company puts Beth on the Job Support Scheme, working 2 days a week (40% of her usual hours).
Her employer pays Beth £140 for the days she works.
And for the time she is not working (3 days or 60%, worth £210), she will also earn 2/3, or £140. This brings her total earnings to £280, 80% of her normal wage.
The Government will give a grant worth £70 (1/3 of hours not worked, equivalent to 20% of her normal wages) to Beth’s employer to support them in keeping Beth’s job.
The Job Retention Bonus
The Job Retention Bonus is a £1,000 one-off taxable payment to you (the employer), for each eligible employee that you furloughed and kept continuously employed until 31 January 2021.
You will be able to claim the bonus between 15 February 2021 and 31 March 2021. Employers using the JSS will also be able to claim the Job Retention Bonus if they meet the eligibility criteria.
To be eligible for the bonus you must make sure that your employees have been paid at least the minimum income threshold of £520 per month. So you must pay your employee a total of at least £1,560 (gross) throughout the tax months:
- November 6 to December 5 2020
- December 6 2020 to January 5 2021
- January 6 to February 5 2021
You must pay your employee at least one payment of taxable earnings (of any amount) in each of the tax months.
The table below breaks down the number of hours an employee must work in order to be eligible. This must be taken into consideration before you start the JSS.
We know there is a lot of information and a lot of questions still to be answered. We are here to support you! If there is anything you would like to discuss give us a call or drop us an e-mail. We would love to grab a coffee and chat over zoom!