*Update 3 November 2020 - the Prime Minister extended the Job Retention Scheme (originally due to close on 31 October), in light of the England-wide lockdown that's due to come into force this week. The Job Retention Scheme will be extended throughout the UK and run until at least 3 December. We've covered the details on this in our latest blog here. The Job Support Scheme, as detailed below, is now on hold for the time being.*

As of 1 November 2020, two schemes will operate to support individuals and businesses to deal with the challenges created by coronavirus (COVID-19) during this winter (2020 to 2021). The schemes will run until 30 April 2021 but the terms will be reviewed in January, presumably on the basis of what progress may have been achieved in respect of the virus.

HM Revenue & Customs understand that whilst some businesses have managed to return to levels of demand near to what they experienced before the start of coronavirus, or have found creative and innovative ways to adapt to the new economic reality, others continue to face challenges. Some businesses, particularly in the hospitality and leisure sectors, have been or may in the future be mandated to close based on the tiered approach to restrictions.

As a result the Government has announced two schemes within the Job Support Scheme (JSS) umbrella – JSS Open for those businesses continuing to operate and JSS Closed for those businesses forced to close due to local/national restrictions. It should be noted that an employer who operates across multiple sites will be able to claim under both schemes at the same time where they are required to close one or more of their workplaces. It is not possible to claim for the same employees under both schemes at the same time and the decision on what scheme to claim under will depend on an employee’s primary workplace.

The Government expect to issue further guidance before the end of October and as experienced with the JRS, there remains several unanswered questions.

JSS Open (JSSO)

Businesses which can continue to operate safely but are facing reduced demand will have access to JSS-Open, where the government grant will cover a portion of wages for non-worked hours.

Key Points

• The scheme will be reviewed on 1st January 2021 so support may be reduced or increased based on the current situation.
• Employers will pay for hours worked, 5% of hours not worked and all of the Employer NIC and minimum pension contributions.
• Employers can top-up above the 5% contribution if they choose to do so. Note that the 5% is based on the reference salary below and not the employee’s actual salary if they are paid above the cap.
• The maximum reference salary is £3,125 per month using the same definition of pay elements as the CJRS which considers:
   - the higher of CJRS reference pay or
   - pay as at 23rd September 2020
• For variable paid employees will consider the higher of:
    - Corresponding period 2019/20.
    - Average wages in 2019/20 or
    - Average wages from 1 February 2020 or employee start date to 23 September 2020.
• The cap of the government contribution is now higher at £1,541.75 per month and for employers, who now pay 5% for unworked hours, £125 per month.
• Employees receive 2/3 of pay for unworked hours = 61.67% from the government and 5% from the employer
• Calculating usual hours will be like the methods used for CJRS although we await clarification on this
• Claims can be made from Tuesday 8 December 2020 at the earliest.

Example

Katie normally works 5 days per week and earns £2,300 per month. Her employer has reduced her hours to 20% of her normal hours and puts her on the JSS Open scheme.

Her employer will pay her £460 for the hours that she works and will pay £92 for the hours she does not work. The Government will contribute 61.67% of the hours not worked, equating to £1,134. Katie’s total pay is therefore £1,686 (73% of her normal pay).

Her employer will also pay for the Employer NI amounting to £132 and minimum auto enrolment pension contributions of £35.

JSS Closed (JSSC)

Businesses are eligible to claim JSS-Closed if their business has been legally required to close as a direct result of COVID-19 restrictions set by one or more of the four governments of the UK. This includes premises restricted to delivery or collection only services from their premises.

The calculation of reference salary proceeds on the same basis as per the JSSO.

Key Points

• The cap for government funding of 2/3 of normal pay is £2,083.33 per month.
• Employers can top-up above their contribution
• Employers will pay the Employer NI and minimum automatic enrolment pension contributions.

Example

Jonathan works for a restaurant that has been forced to close. He normally earns £2,750 per month and he has been placed on the JSSC for a full pay period.

His employer is not topping up his pay and therefore Jonathan will be paid as per the Government contribution of £1,811 (2/3 of his normal pay).

His employer will pay for the Employer NI amounting to £154 and minimum auto enrolment pension contributions of £39.

For both schemes, we await technical detail from HMRC which is expected on or before 31st October 2020.

Who can claim?

Employers will be able to access the Job Support Scheme if:

• they have enrolled for PAYE online
• they have a UK, Channel Island or Isle of Man bank account

Additional eligibility criteria will apply depending on whether the employer is claiming a JSS Open grant or JSS Closed grant.

Who can claim JSS (Open)?

• an employer with 250 or more employees on 23 September 2020 has undertaken a Financial Impact Test demonstrating their turnover has remained equal or fallen to show they have been adversely affected due to coronavirus
• an employer with less than 250 employees on 23 September 2020 is not required to satisfy the test
• some, or all, of their employees are working reduced hours - employees must still be working for at least 20% of their usual hours
• Employers can still claim for Job Retention Bonus (JRB)

What is a Financial Impact Test (FIT)?

Large employers claiming JSS Open, defined here as a legal entity with 250 or more employees across their payrolls on 23 September 2020, need to complete a Financial Impact Test to evidence that their income has been impacted due to coronavirus.

If the employer’s turnover has remained equal or has decreased compared to the previous year, then they will qualify.

This test only needs to be taken once before the employers first claim for the Job Support Scheme. You can read more on HMRC's website within the eligibility section here.

Who can claim JSS (Closed)?

Eligible employers will be able to claim the JSS Closed grant for employees:

• whose primary work place is at the premises that have been legally required to close as a direct result of coronavirus restrictions set by one or more of the four governments of the UK
• that the employer has instructed to and who cease work for a minimum period of at least 7 consecutive calendar days
• Employers can still claim for Job Retention Bonus (JRB)

This is not a complete list of employee eligibility requirements for JSS Closed and further guidance will be published by the end of October.

Employee eligibility

Employers will be able to claim the JSS grant for employees who were included on their Full Payment Submission, a return filed by your payroll department between 6th April 2019 and 11:59pm on 23rd September 2020.

Key Points

• If employees ceased employment after 23rd September 2020 and were rehired, then employers can claim for them.
• Employees do not need to be on a specific type of contract so the JSS is applicable for zero hours and temporary contracts.
• Employees do not need to have been furloughed under the CJRS to be eligible for JSS.
• Employers can claim for both JSS (Open) and JSS (Closed) although not on the same day – careful consideration must be taken with preparation of calculations.
• Employees will be able to complete training voluntarily in non-working hours although this attracts minimum wage entitlement and must be paid in excess of any grant payment.

Redundancy and Notice Period

Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period. As always, please obtain legal advice around all matter regarding termination of employment.

Do I still need to pay HM Revenue & Customs monthly?

Yes, the Job Support Scheme grant will not cover National Insurance contributions or pension contributions. Please ensure that all liabilities are paid promptly or consider speaking with the COVID-19 Helpline to obtain a deferral or payment arrangement.

The following liabilities remain payable:

• Income Tax
• National Insurance (EE)
• National Insurance (ER)
• Student Loan
• Apprenticeship Levy
• Pension Contribution (EE)
• Pension Contribution (ER)

Do I need to pay the full grant to my employee?

Yes, employers must pay the full amount claimed for an employee directly to the employee before each claim is paid. HMRC will be able to verify this based on your Full Payment Submission which is filed on or before your contractual pay date. 

Directors

The guidance issued so far does not mention directors specifically. We anticipate that directors will be treated in line with the JRS and that for those businesses forced to close, they will be able to make claims under the JSSC.

Where a business remains open, directors will need to be mindful of claiming under the JSSO given their wide responsibilities for running a business that is trading. We would therefore anticipate that claims for directors under the JSSO will be by exception.

Here to help

If you would like to discuss this further, or find out how Johnston Carmichael can help you at this challenging time, please don't hesitate to get in touch with me or your usual Johnston Carmichael adviser.