Coronavirus Job Support Scheme

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coronavirus job support scheme
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The Job Support Scheme guidance on the HMRC website has currently been withdrawn as a result of the Coronavirus Job Retention Scheme Extension. The Job Support Scheme will replace the Job Retention Scheme when the extension ends and we have therefore left preliminary guidance previously announced below as reference.

 

What is the Job Support Scheme?

To support individuals and businesses to deal with the challenges created by coronavirus (COVID-19) during this winter (2020 to 2021), the government is providing additional support to help employers retain their employees through the Job Support Scheme (JSS).

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.

Businesses that are operating but facing decreased demand can get support for wages through JSS Open.

Those businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK can get the support they need through JSS Closed.

What is JSS open?

Many employers can operate safely but continue to face reduced demand so they may need extra support over the winter to help keep their employees attached to their workforce. For these employers, the Job Support Scheme, through JSS Open, will give employers the option of keeping their employees in a job on shorter hours rather than making them redundant.

The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked. Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government.

The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish.

The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month.

This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

What is JSS closed?

Employers have been legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK. For these businesses, the Job Support Scheme, through JSS Closed, will help them through the period that they are directly affected by these restrictions by supporting the wage costs of employees who have been instructed to cease work in eligible (closed) premises.

Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish.

Employees may also be entitled to additional financial support, including Universal Credit.

 

When will the scheme open and how long will support be provided?

The Job Support Scheme will be open from 1 November 2020 and run for 6 months, until 30 April 2021. The government will review the terms of the scheme in January. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved. Neither the employer nor the employee needs to have benefitted from the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.

 

What are the overall eligibility criteria?

The following eligibility criteria apply to all employers and/or employees being claimed for under the Job Support Scheme, whether the employer is claiming the JSS Open grant or the JSS Closed grant.

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

Employees who can be claimed for (JSS Open and JSS Closed):

  • Eligible employers will be able to claim the Job Support Scheme grant for employees who were on their PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. This means an RTI Full Payment Submission notifying payment in respect of that employee must have been made to HMRC at some point from 6 April 2019 up to 11:59pm 23 September 2020.
  • Employers can only claim for employees that were in their employment on 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them.

Clarification points:

  • An individual is an employee for the purposes of this scheme if they are treated as an employee for Income Tax purposes.
  • Employees can be on any type of contract, including zero hours or temporary contracts.
  • Agency workers are regarded as employees of an employment agency for the purposes of this scheme, provided they are employees for Income Tax purposes.
  • Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
  • Employers will be able to top up employee wages above the level of minimum contributions at their own expense if they wish.
  • Employers cannot claim both JSS Open and JSS Closed in respect of a single employee for the same day.
  • Employees will be able to undertake training voluntarily in non-working hours. Where time spent on training attracts a minimum wage entitlement in excess of the grant payment, employers will need to pay the additional wages.
  • Employees whose hours reduce due to the COVID-19 pandemic will continue to have access to Working Tax Credit and its childcare element for the duration of the JSS scheme.
  • The government is putting will introduce parental pay legislation as soon as possible (covering maternity allowance, statutory maternity/, paternity, shared parental, adoption and parental bereavement pay) to avoid parents losing out on their entitlement to parental pay as a result of being put on the Job Support Scheme during the relevant assessment period.
  • Additional eligibility criteria will apply depending on whether the employer is claiming a JSS Open grant or JSS Closed grant.
  • An employer can claim the JSS Open and JSS Closed grant at the same time for different employees. An employer cannot claim for a single employee under both schemes at the same time.

Who can claim open JSS?

In addition to the general Job Support Scheme eligibility criteria set out in the overall criteria, employers are eligible to claim the JSS Open if:

  • 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

For further details on the Financial Impact test for large employers claiming JSS Open refer to the gov website.

Can my employees do training?

Employees can do training in working hours while being claimed for under the Job Support Scheme. Hours that employees spend training are paid for by the employer at their full rate of pay and will count towards 20% of their usual hours.

How are minimum wage rules impacted?

Employees are entitled to the National Living Wage, National Minimum Wage or Apprentices Minimum Wage for the hours they are working or treated as working (such as training undertaken at the request of the employer in non-working hours) under minimum wage rules. For JSS Open, at least minimum wage rates must be paid for all hours worked or treated as worked.

What documents and agreements do I need to have in place to make use to the open JSS scheme?

To be eligible for the grant, employers must have reached written agreement with their employee that they have been offered a temporary working agreement. The agreement must be available for view by HMRC on request. Example agreements can be found here.

This temporary working agreement must cover at least seven consecutive days.

Employers should discuss with their staff and make any changes to their employment contract by written agreement. When employers are making decisions, including deciding to whom they should offer reduced hours, equality and discrimination laws will apply in the usual way.

Employers must maintain records relating to the terms of the temporary working agreements for each employee, and:

  • make sure that the agreement is consistent with employment, equality and discrimination laws
  • keep a written record of the agreement for 5 years
  • keep records of how many hours employees work and the number of usual hours they are not working
  • this agreement must be made available to HMRC on request

HMRC will publish further guidance on what to include in the written agreement by the end of October.

Who can claim closed JSS?

In addition to the general Job Support Scheme eligibility criteria, employers are eligible to claim JSS Closed if their business premises at one or more locations has been legally required to close as a direct result of coronavirus 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 and those restricted to provision of food and/ or drink outdoors.

Businesses premises required to close by local public health authorities as a result of specific workplace outbreaks are not eligible for this scheme.

Employers are only eligible to claim for periods during which the relevant coronavirus restrictions are in place. Employers will not be able to claim JSS Closed to cover periods after restrictions have lifted and the business premises is legally allowed to reopen. They may then be able to claim JSS Open if they are eligible.

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

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

 

What documents and agreements do I need to have in place to make use to the closed JSS scheme?

Employers should discuss with their staff and make any changes to their employment contract by written agreement. When employers are making decisions in relation to the process, including deciding who they should instruct to cease work, equality and discrimination laws will apply in the usual way.

To be eligible for the grant, employers must have reached written agreement with their employee that they have been instructed to and agree to stop working for a minimum of 7 consecutive calendar days. The agreement must be available for view by HMRC on request. Example agreements can be found here.

Employers must maintain records relating to the terms of these arrangements for each employee. They must:

  • notify the employee of the agreement in writing
  • make sure that the agreement is consistent with employment, equality and discrimination laws
  • keep a written record of the agreement for 5 years
  • this agreement must be made available to HMRC on request

The employee must agree to the new arrangement.

What are the key conditions of both the open and closed JSS that you should be aware of?

Redundancy

Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.

Shareholder distributions

The government expects that large employers (250 or more employees) and their corporate groups using the scheme will not make capital distributions whilst claiming the Job Support Scheme grant.

Paying employee taxes and pension contributions

The Job Support Scheme grant will not cover National Insurance contributions (NICs) or pension contributions. These contributions remain payable by the employer.

Employers must deduct and pay to HMRC income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.

Employers must also pay to HMRC any employer NICs due on the full amount that that is paid to the employee, including any amounts subsequently met by a scheme grant.

Employers must report these payments via a Full Payment Submission (FPS) to HMRC on or before the pay date in the normal way.

Employers and Employees must also still pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped saving into their pension. If applicable Student Loan deductions and the Apprenticeship Levy must also still be paid.

Grant monies must only reimburse sums already paid to the employee

Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made. They should also pay the associated employee tax and employee and employer National Insurance contributions to HMRC, even if the company is in administration.

Employers cannot enter into any commitment or transaction with the employee which would reduce wages below the amount claimed (for example a salary sacrifice scheme). This includes any administration charge, fees or other costs in connection with the employment. Where an employee had authorised their employer to make deductions from their net salary, these deductions can continue while the employee is working reduced hours provided that these deductions are not administration charges, fees or other costs in connection with the employment (for example, pension contributions and charitable giving).

Employees will be able to check if their employer has made a Job Support Scheme claim relating to them via their Personal Tax Account (sign up on GOV.UK).

When can claims be made?

Employers will be able make their first claim from 8 December 2020 on GOV.UK. Employers will be able to claim from 8 December, covering salary for pay periods ending and paid in November. Subsequent months will follow a similar pattern, with the final claims for April being made from early May. More detail about this process will be published in guidance by the end of October 2020.

Agents who are authorised to do PAYE online for employers will be able to claim on their behalf.

What checks and penalties will HMRC apply?

HMRC will check claims and payments may be withheld if HMRC suspects a claim to be ineligible.

The amount of any overpayment by the employer must be paid back to HMRC where a claim contains incorrect information.

The full amount of any grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount overclaimed may be applied where appropriate. HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect Job Support Scheme grant claim.

HMRC intend to publish the names of employers who have used the scheme. The public can report fraud to HMRC if they have evidence to suggest an employer is abusing the scheme.

Employees will be able to check if their employer has made a claim relating to them via their Personal Tax Account (sign up on GOV.UK).

Can employers still claim the Job retention bonus if using JSS?

Employers claiming the Job Support Scheme may still claim the Job Retention Bonus in respect of the same employee if they are eligible. Grants claimed under the Job Support Scheme can be used by employers to pay an employee’s wages and help meet the Lower Earnings Limit of the Job Retention Bonus.

How much can employers claim?

This section is relevant only for JSS Open and are indicative. Further details of calculations employers need to do to work out their claim will be available in the guidance published at the end of October 2020.

Under JSS Open, employers can claim for government support for their employees’ wages (including employees on National Minimum Wage) – up to a maximum of £1,541.75 per month, depending on how many hours they work. This section applies to JSS Open and the further guidance at the end of October will set out how to work out reference salary for JSS Closed.

Employers cannot claim for employees’ wages for any time they spend working.

Claims should commence from the later of the date that the employee starts working reduced hours or the date when working reduced hours is confirmed in writing, not when the decision is made. Claim periods can start from 1 November 2020 onwards. Claims are subject to a maximum reference salary of £3,125 per calendar month.

What makes up the reference salary?

The amount an employer should use for calculating an employees’ reference salary is made up of the regular payments they are obliged to make, including:

  • regular wages
  • non-discretionary payments for hours worked, including overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece rate payments

Calculations cannot include:

  • payments made at the discretion of the employer or a client, where the employer or client was under no contractual obligation to pay, including:
  • any tips, including those distributed through troncs
  • discretionary bonuses
  • discretionary commission payments
  • non-cash payments
  • non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay

Reference salary for employees with fixed pay

For employees who are paid a fixed salary, the Reference Salary is the greater of:

  • the wages payable to the employee in the last pay period ending on or before 23 September 2020
  • the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme

Reference salary for employees with variable pay

For employees whose pay is variable the Reference Salary is the greater of:

  • the wages earned in the same calendar period in the tax year 2019 to 2020
  • the average wages payable in the tax year 2019 to 2020
  • the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

How to calculate usual hours?

Employees who work fixed hours

For employees contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, usual hours are calculated based upon the greater of:

  • the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
  • the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention scheme (NB. if employees moved to part time working, this may be varied full details will be included in forthcoming Guidance)

This should include hours paid as annual leave and statutory leave.

Employees who work variable hours

The variable hours calculation applies if either:

  • the employee is not contracted to a fixed number of hours
  • the employee’s pay depends on the number of hours they work

For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the higher of:

  • the number of hours worked in the same calendar period in the tax year 2019 to 2020
  • the average number of hours worked in the tax year 2019 to 2020
  • the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

This should include hours paid as annual leave and statutory leave.

The calculation of usual hours is not and cannot be altered if the employee is expecting to work more or fewer hours than this in the future.

For employees who are part of a flexible work time arrangement, employers should:

  • not count as hours worked any hours that the employee worked but was not paid for because they accrued paid time off which they could take later
  • count as hours worked any hours that the employee took as paid time off (‘flexi-leave’), which they had accrued by working additional hours at some other time

For employees who are paid per task or per piece of work done whose hours cannot be calculated in this way, hours can be estimated based on the number of ‘pieces’ produced and the average rate of work per hour, as per National Minimum Wage rules.

Full rules will be covered in guidance at the end of October.

 

Tom McManners
Tom McManners BSc ACA ACMI

Tom is a Chartered Accountant and Senior Statutory Auditor. He is also the Director at Treetops. For more accounting advice please call or complete our website contact form:

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