30th September 2020
Recently unveiled by the Chancellor Rishi Sunak, the Job Support Scheme (JSS) comes into effect from 1st November 2020.
This new scheme replaces the current Coronavirus Job Retention Scheme (Furlough scheme) which will come to an end as planned on 31st October 2020.
The JSS will run for 6 months up to 30th April 2021.
For businesses and employees to be eligible for the JSS, the employees job needs to be classified as ‘viable’. This is obviously an area of contention as to what ‘viable’ means. Most businesses and employees would likely argue that without the impacts of Coronavirus, ALL jobs would be viable. The Government are therefore not providing additional details on this area.
The JSS is claimable when the employee works at least 1/3 (above 33%) of their normal working hours. They will receive their normal pay for these hours worked.
The balance of 2/3 (roughly 66% for ease of calculation below) is then split as follows: –
- 22% is paid for by the Government.
- 22% is paid for by the Employer.
- 22% is paid for by the Employee by not receiving pay.
So, for an employee who normally works a 40-hour week at £10 per hour, their Gross pay would be as follows under the JSS: –
- Hours worked (13 hours 20 minutes @ £10 per hour) = £133.33
- Government top-up @ 22% of unworked hours = £88.89
- Employer top-up @ 22% of unworked hours = £88.89
The employees Gross pay is therefore £311.11. As their normal Gross pay would have been £400.00, the employee contribution is the same as their Employer’s and the Governments (£88.89).
In real terms, the Government are contributing just over 22% of the employees pay under this scenario. The percentage changes if the employee works more than the minimum 1/3 of normal working hours. For example, if the employee works 70% of their normal hours, the Government contribution equates to 10%.
As the current Furlough scheme covered 80% (dropping to 60%) of employees’ wages, this is a substantial reduction which will be tough for businesses to absorb.
For the employer, the cost to them for an employee working 1/3 of their normal hours equates to just over 55% of the employee pay.
The JSS can be applied for by all Small and Medium-sized businesses (and some large Companies too – depending on financial impact). It does not require the business to have made previous claims under the Coronavirus Job Retention Scheme.
Also, the Job Retention Bonus (£1,000 per employee) is still claimable whether the JSS is claimed for or not.
For employees to qualify for the JSS, they must have been on the employer’s payroll scheme before 23rd September 2020 and HMRC must have been advised on their employment by a RTI submission prior to this date.
There is a footnote in the guidance that after 3 months of the scheme commencing that the minimum working hours threshold can be reviewed by the Government.
The maximum claim per employee under the JSS is capped at £697.92 per month.
The grants are paid in arrears (following a successful claim being submitted) and only covers the employees Gross pay (no National Insurance or pension contributions).
Calculations will also be based on ‘usual hours’ and not on any previous Furlough pay calculations. So, if an employee was earning £10 per hour before Coronavirus hit, this will be the hourly rate to use (not £8 per hour based on 80% Furlough pay).
Every employer must pay their employees their contracted wages for hours worked, with the balance being made-up by the Employer and the Government. It is not envisaged that employers will top-up employees pay above the 2/3 contribution (so no requirement to top-up employees wages to 100% full pay under the JSS).
To make a claim, Employers will make a submission via the Gov.uk website. It is not yet known whether Agents can assist with the claims and a launch date for the portal is not yet known.
Claims can only be made after the employee has been paid and the relevant RTI submission made to HMRC. There will therefore be a time delay between paying employees and receiving the JSS from HMRC.
Further information will follow as and when we receive it.