With the announcement of the Job Support Scheme (JSS) replacing CJRS in November, many employers are hopeful they can retain some of their staff. But there are still many questions that need answering ...
Currently, the Chancellor has only released one factsheet about the Job Support Scheme, so information is a bit thin on the ground. HMRC has said it will issue guidance in October, but there is no draft legislation at the moment.
It only applies to salaries and wages that are paid from the 1st November 2020 to the 30th April 2021, unless the Chancellor extends the scheme. Any of your employees included in an RTI submission, on or before the 23rd September 2020, can be included in a JSS claim. Working hours commitments must also be met.
If you are a director who is paid annually in late March, you may not be eligible for the HSS grant, depending on when HMRC accepts the RTI return for 2020/21 or an earlier year. You may have been excluded from CJRS for similar reasons.
The Job Support Scheme is not just for employees who were furloughed for all, or some, of the period between March and October 2020. Again, unlike CJRS, this scheme is available for any employees who have recently joined your payroll.
The Chancellor has expressed a wish that only employees of small and medium-sized businesses who have a UK bank account will be included under the Job Support Scheme without further conditions being applied. Larger employers must prove their turnover has been reduced due to COVID-19 before HMRC will allow them to participate in the Job Support Scheme.
A note of caution though. Should you, as a large employer, be accepted onto JSS, you will be expected to withhold dividends for your shareholders and you can't use any share buyback schemes.
Employees you intend to claim for must work for at least 33% of their usual hours. This could mean 'contracted hours', but I'm unsure of this definition for now. Many of your employees could be working part-time as part of a flexi-furlough, so this definition really does need clarifying.
As long as your employees work at least 1/3 of their usual hours in a week, you can chop and change when those hours are as long as each period of work last for a minimum of seven days.
You have to pay your employee for hours actually worked. This is at pre-COVID wages rates (not the 80% of furlough rate). You pay 55% of an employee's normal pay, the JSS grant then covers 22% of the hours not worked, and then you add a further 33% on those non-worked hours.
Government contributions are capped at £697.92 per month and employers must also pay minimum pension contributions to their workplace pension as well as employer's NI contributions.
To clarify this, I think an example is needed:
- Alex, an airline pilot, is paid £52,000 a year which is £1,000 per week
- efore COVID-19, he worked 36 basic hours per week, so his basic hourly rate is £27.78
- Alex agreed to work 12 hours per week, with 24 non-working hours. His employer must pay him for 28 hours (12 working + 16 non-working). The JSS will cover eight of those non-working hours, subject to the monthly cap
- On a weekly basis, Alex receives pay for 28 hours: £777.84, and the JSS covers eight hours: £222.24, per week
- In November Alex works 48 hours over four weeks and is paid for 112 hours: £3,111.36. The JSS is capped at £697.92 per month, so the employer must bear the cost of the balance: £2,413.44 plus employer's NI and pension
- That works out at £50.28 of basic pay per hour; 180% of Alex's normal hourly rate.
And finally, you must pay your employees first, then claim for JSS via an online portal opening in December 2020. The grant will be paid to you once the RTI return has been submitted. Remember, JSS is a reimbursement of wages actually paid.
I'll write more as HMRC releases additional guidance.
If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.