The Job Support Scheme (JSS) will replace the Coronavirus Job Retention Scheme when it ends (currently expected to be 31 March 2021). Originally announced on 24 September as part of the Chancellor’s Winter Economy Plan to support part time workers, the terms were made more generous on 22 October.
An additional strand was added to the scheme on 9 October 2020 to help businesses legally forced to close their premises due to local lockdowns (the JSSC). The following outline of the rules is based on details published to 5 November 2020.
JSS (open) for part time workers
The JSS will be open to all employers with a UK PAYE scheme and bank account. However, to be eligible, businesses with 250 or more employees must pass a financial impact test (comparing total sales for a specified three month period with the same period in 2019 based on their VAT returns). Larger charities need not take this test and will qualify for the scheme but it is not available to “organisations that have staff costs that are fully publicly funded”. Although it is not a legal requirement, the Government says that it would not expect a business claiming under either JSS to make capital distributions (dividends or profit shares) while claiming.
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 the JSS and employers can claim under both the JSS schemes and the Job Retention Bonus Scheme. As this is a new scheme, all employees on the payroll at a specified date (originally 23 September 2020) can qualify and HMRC confirms that employees who ceased employment after that date but were subsequently rehired, can qualify.
The scheme is intended for trading employers, so employers can only claim the JSS subsidy for all employees that work at least 20% 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 the second three months. Work related training undertaken by employees is counted as part of their working hours for this test.
The subsidy from the government will be up to 61.67% of the employee’s usual wages (calculated as under CJRS and up to a maximum of £1,541.75 per month per month) for the contractual hours not worked during the claim period. Employers will be required to pay for the employees hours worked plus 5% of pay for the hours not worked as well as pay employers’ NIC and pension contributions on the total salary payment. In total, this will guarantee employees a minimum income of 73% of their normal earnings (up to the earnings cap of £3,125 per month) during the claim period with employers meeting at least 20% of the normal wage costs, plus 5% of the cap wages for the hours not worked (maximum £125 a month) plus the NIC and pension contributions. Employer top-up payments for hours not worked will 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. In addition, in the appropriate circumstances, employees can qualify for both the JSS (Open) and JSS (Closed) schemes – but not for the same period. However, periods of short time working (and related JSS (Open) claims) must be for a minimum seven day period and they must be formally agreed with and notified to the employee and documented properly so that HMRC can check the records after a claim (records must be kept for five years).
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 in spring 2021, 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 and will record claims made within employee’s personal tax account records (presumably to encourage whistleblowing where fraudulent claims are made). HMRC has stated that it may charge 100% penalties where it identifies fraudulent claims and will consider naming and shaming offending employers.
Job Support Scheme for closed business premises (JSS Closed)
From the end of the CJRS (expected to be 31 March 2021), 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 JSS (Closed) 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 JSS (Closed). Much of the other qualifying criteria for employers will be the same as the JSS (Open). As with the JSS (Open), claims for the grants can be made 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 £2,083 per month) for the hours not worked in a month specifically because of a local lockdown. This is to cover wages, and must be passed on in full to employees: employers must still deduct PAYE and pay all 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 half way through the six month period, 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.