The Job Support Scheme (JSS) will replace the Coronavirus Job Retention Scheme from 1 November. Originally announced on 24 September as part of the Chancellor’s Winter Economy Plan to support part time workers, a second strand was added on 9 October 2020 to help businesses legally forced to close their premises due to local lockdowns (the JSSC).
JSS for part time workers
The JSS will be open to all employers with a UK PAYE scheme and bank account but, to be eligible, large companies must be able to prove that they are still suffering a significant drop in turnover as a result of the pandemic. It is confirmed that this is a stand-alone scheme - there is no requirement for the employer or employee to have participated in the CJRS prior to 1 November and employers can claim under both the JSS and the Job Retention Bonus Scheme. As this is a new scheme, all employees on the payroll at 23 September 2020 can qualify for JSS.
The scheme is intended “To support viable UK employers”, so employers can only claim the JSS subsidy for all employees that work at least 33% of their normal contractual hours during the claim period. This ‘viability’ test applies for the first three months of the scheme but the government may adjust the working hours threshold for claims covering February to April 2021.
The subsidy from the government will be up to 33% of the employee’s usual wages (calculated as under CJRS and up to a maximum of £697.92 per month) for the contractual hours not worked during the claim period. Employers will be required to match this payment in percentage terms as well as pay employers’ NIC and pension contributions on the total salary payment. In total, this will guarantee employees a minimum income of 77% of their normal earnings during the claim period with employers meeting at least 55% of the normal wage costs plus the NIC and pension contributions. Employer top-up payments for hours not worked will not be permitted.
The scheme is flexible (similar to the flexible CJRS scheme) in that employees can be added and removed at any time, to allow them to resume full time work for a busy period and then go back into JSS when their working hours drop. However, periods of short time working (and related JSS claims) must be for a minimum seven day period and they must be formally notified to the employee and documented properly so that HMRC can check the records after a claim.
There will be several restrictions placed on employers who use the JSS. Large companies making claims under the scheme will be prevented from making certain payments (such as dividends to shareholders or capital distributions) while the scheme continues. Similarly, any employer cannot claim for an employee who is on notice of redundancy or make an employee redundant during a claim period.
It is expected that a new claims portal will open during December, but employers should note that the JSS subsidy will be paid monthly in arrears after the relevant RTI payroll submission for the month. Therefore, employers will only be able to claim reimbursement after they have made wage payments to employees. This is less helpful for an employer’s cash flow than the current CJRS but should help to reduce the likelihood of incorrect claims being made. It is expected that HMRC will check JSS claims against RTI records and investigate discrepancies.
Job Support Scheme for closed business premises (JSSC)
From 1 November, where a business is legally required to shut its premises as a result of local restrictions set by one of the four governments in the UK, it will be able to make JSSC claims to support the wages of its employees that cannot work as a result. The Chancellor has explained that businesses that must shut their premises to the public but are allowed to continue providing a collection or delivery only service can make claims for staff who cannot work as a result (e.g. a restaurant switching to takeaway only services could claim for its waiting staff who cannot work). However, where a COVID-19 outbreak is centred on a specific business premises which is then required to shut, that business will not qualify for the scheme.
It is not necessary for the business to have made prior CJRS claims, but the local lockdown must be for at least seven consecutive days to qualify for the JSSC. Much of the other qualifying criteria for employers will be the same as the JSS for part time working. As with the JSS, claims for the grants can be made from December 2020 and will be paid monthly in arrears (ie reimbursing employers for wage payments already made).
Grant payments will cover up to two thirds of each employee’s wages (up to a maximum of £2,100 per month) for the hours not worked in a month specifically because of a local lockdowns. This is to cover wages and employee PAYE and NIC and must be passed on in full to employees: employers must still pay employer’s NIC and pension contributions. Employers can top-up employees’ wages (ie pay more than 66.67% of normal salary for non-worked hours) before a claim is made.
Although the scheme is to run for six months, the Government will review it in January 2021, so it is possible that the rules and thresholds will change at that point. The Government has made clear that claims will be checked by HMRC before payments are made to reduce the chance of fraud and incorrect claims – this may create time delays in payments.
BDO can assist you in preparing claims for the JSS so that you can be sure that claims are correct and reduce the likelihood of challenge by HMRC and delays to grant payments. For help and support please contact our team of experts.