Job Support Scheme (JSS) to Replace Furlough in November

Chancellor Rishi Sunak has announced that once the Furlough Scheme finishes at the end of October, there will be a new support scheme for businesses who are able to trade and keep their employees in work for at least 1/3 of their normal hours.

The government has said that it will subsidise some of the payment to employees for time not worked, but the employer will have to contribute too, and the scheme will run for six months. However, employers will not be able to issue to redundancy notices to those workers on the scheme.

Employers will continue to pay the wages of staff for the hours they work - but for the hours not worked, the government and the employer will each pay one third of their equivalent salary.

This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they cannot work.

The level of grant payable will be calculated based on an employee’s usual salary, capped at £697.92 per month.

Grant payments will be made in arrears, reimbursing the employer for the
Government’s contribution. The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.

Employees who have previously been furloughed, will have their underlying usual pay and/or hours used to calculate usual wages, not the amount they were paid whilst on furlough.

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 mathematics involved is not immediately obvious. If we take the example that HMRC has put forward and apply it to a typical situation, we get the following:

• An employee normally works 39 hours per week, but the employer only has enough work for them to undertake a third of that (13 hours). This leaves 26 hours per week not worked. The employer would have to pay the employee for a third of the unworked time (1/3 x 26 = 8 hours and 40 minutes). So overall the employer would pay for 13 + 8 hours 40 minutes = 21 hours 40 minutes.

• The government would pay a grant covering 8 hours and 40 minutes, so in total the employee would receive payment for 30 hours and 20 minutes for doing 13 hours of work (subject to the cap if the employee earns more).

This is clearly going to be keeping payroll professionals busy for the next six months!

The Job Support Scheme (JSS) will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course. It will be open to all SMEs and to larger employers whose turnover has fallen during the Covid crisis. However, they have been warned that there will be restrictions on larger companies with regards to the amount they can pay shareholders whilst in receipt of money for their workers on this scheme.

However, there are qualification periods for eligible staff: Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HMRC must have been made on or before 23 September 2020.

Employees will be able to cycle on and off the scheme and 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, even though the claim period is monthly.

It is designed to sit alongside the Jobs Retention Bonus (remember that?) and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs, but only if they previously furloughed employees and they are now back at work for 33% or more of their time.

HMRC will check claims for fraud as they have been doing for the Coronavirus Job Retention Scheme (furlough). Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. Grants can only be used as reimbursement for wage costs actually incurred.

Furthermore, the intention is that employees will be informed by HMRC directly of full details of the claim.

To meet with employment law requirements, 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.

For more information on the full plan including other financial support for businesses, see
Posted on 24 Sep 2020
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