The Government's New Job Support Scheme
Everything we know so far ...
POSTED BY ROGER EDDOWES ON 01/10/2020 @ 8:00AM
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 ...
The Job Support Scheme replaces CJRS from November 2020!
copyright: vinnstock / 123rf
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.
"Like CJRS, the Job Support Scheme has a limited lifetime!"
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.
"Those employees on redundancy notice, or who have already been made redundant can not be included in the JSS claim!"
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.
"The 33% ratio will apply from November 2020 to January 2021 and could conceivably be adjusted after that!"
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
Before 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.
Until next time ...
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about the Job Support Scheme, call me on 01908 774320, leave a comment below or click here to ping over an email and let's see how I can help.
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About Roger Eddowes ...
Roger trained at Edward Thomas Peirson & Sons in Market Harborough before working at Hartwell & Co, followed by Chancery, as a partner. He started Essendon Accounts and Tax with Helen Beaumont in 2014 as a general practitioner with a hands-on approach.
Roger loves getting his hands dirty, working with emerging, small-to-medium and family businesses to ensure they receive the best possible accountancy advice. Roger utilises an extensive network of business contacts to leverage the best guidance and practical solutions.
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