Changes to the Job Support Scheme (currently deferred)

Resourced 3rd November 2020 *

On the eve of the new Job Support Scheme coming into force, the UK Government announced that the scheme will be deferred by at least one month. As a result, the Job Retention Scheme has been extended on more favourable terms.

Full details about the extended Job Retention Scheme, including an resourced claims process and when the first claims can be made, is yet to be issued and we will resource you when we know more. The details that have been released are:

There will be no gap in eligibility for support between the old furlough arrangements and this extension to the Job Retention Scheme.
The methodology for the calculations will remain broadly the same as those we have seen in previous months.
Employees can be furloughed on a full or part-time basis.
Neither the employer nor the employee needs to have previously used the CJRS.
To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
Employers can claim 80% of wage costs for non worked hours up to a cap of £2,500, whilst retaining responsibility for paying hours that have been worked together with all National Insurance and pension contribution costs. The employer can top up their employees pay, should they want to.
A claim must be submitted for a minimum period of 7 consecutive days.
If an employee was on the payroll as at 23 September 2020 and have since been made redundant or stopped working for the business, they can be re-employed and put on furlough.

The Job Support Scheme (JSS) was amended on 22 October by the Chancellor, but has now been deferred by one month as outlined above.

Why has the JSS had to be changed?

The JSS, as originally announced, was criticised widely as the overall level of support that it provided to employers, was comparatively low in comparison to the Coronavirus Job Retention Scheme.

The view from many businesses was that it did not provide enough support to justify retaining jobs, at a time where businesses were being either closed or severely restricted in terms of operations.

For many businesses, the simpler choice was to move to redundancy processes, rather than use the JSS. With the changes that have been announced, it may be possible for more employers to now retain staff.

The resourced JSS will operate through the same period as previously intended, being 1 November 2020 to 30 April 2021.

Key changes

The key changes which have been announced by the chancellor are as follows:

1) The JSS is now being split into two different types:

a. The JSS (Open); and
b. The JSS (Closed)

Employers who are suffering decreased demand can use the JSS (Open) scheme and employers whose premises have had to close due to legal restrictions, are able to use the JSS (Closed) scheme.

These main points for each scheme can be summarised as follows:

	JSS (Open)	JSS (Closed)	The original JSS
Time to be worked and to be paid by employer as worked	Minimum of 20% of their usual hours	No minmum	Minimum of 33% of their usual hours
Employer contribution to wages required for hours not worked	5% of reference salary for hours not worked up to a maximum of £125 a month	None	33% of reference salary up to a maximum of £697.92 a month
Government contribution	61.67% of reference salary up to a maximum of £1,541.75 a month	66.67% of reference salary up to a maximum of £2,083.33 a month	22%of reference salary up to a maximum of £697.92 a month
Can an employer voluntarily add further pay	Yes	Yes	Was not expected
Total wages which can be earned by the employee under the measure	At least 73% of normal wages, where an employee earns £3,125 a month or less	At least 66.6% of normal wages, where an employee earns £3,125 a month or less	77% of normal wages
Pension and employer NIC costs	Paid by employer	Paid by employer	Paid by employer
JSS funds payment received when	In arrears, the month after payroll RTI submitted	In arrears, the month after payroll RTI submitted	In arrears, the month after payroll RTI submitted

The JSS (Closed), is applicable to only those businesses which have been legally required to cease operations due to Government restrictions and where that period of closure continues for at least seven consecutive days. Please note this scheme is not for employers who elect to close for a period of time.

When the Government restrictions no longer apply, claims cannot be made under the JSS (Closed). However, a business that has been in the JSS (Closed), can then move into the JSS (Open), when the restrictions are eased so that they can open their premises and operate at reduced demand.

If an employer elects to close and has no work for their staff, it is worth noting that they cannot use the JSS (Open). This is due to the employee not working the minimum number of hours, as outlined in the scheme criteria.

Large employers will have to show reduced sales to use the JSS (Open)

Large employers with more than 250 employees will have to be able to show that their “income” has remained equal to, or been negatively affected, compared to the same period in 2019.

In practice, it is expected that this will be carried out by using VAT returns which are to be filed from 31 August 2020 to 7 November 2020 and comparing those to the VAT returns for the same period in 2019.

The turnover in the VAT returns will be used to carry out a Financial Impact Test where the turnover would be expected to be equal to, or less than, the 2019 figure for a large business to use JSS (Open).

The Financial Impact Test requirement for large businesses is stated to apply to the JSS (Open) and so the assumption is that large businesses can use the JSS (Closed) for employees at premises which have been closed by legal requirement without the Financial Impact Test applying to those premises.

No JSS claims by large employers where shareholder distributions made

The guidance states that where large employers (i.e. those with >250 employees) are claiming JSS (Open) or JSS (Closed) then they will not be able to make capital distributions in the form of dividends, charges, free distributions or any equivalent payment a partnership may make to its partners. Notably, the guidance says:

“the Government does not plan to make this expectation a contractual or legal condition of the scheme but encourages business to reflect on their responsibilities and that taxpayers should be able to rely on public money only being claimed where it is clearly needed”

Overall, these changes are welcome and better reflect the restrictions that businesses need to operate under.

However, the rules for when a business is within JSS (Open) and JSS (Closed) will, of course, create additional complexity and difficulty when viewed from the perspective of businesses by whom the claims will actually be made.

Get in touch

If you have any questions about the Job Support Scheme, please get in touch with our Employer Advisory Team: EmployerAdvisoryTeam@hlca.co.uk

Last Updated on 24 June 2021