Job Support Scheme: enhanced financial support for COVID-hit businesses

UPDATED: The Job Support Scheme has been suspended as a result of the national lockdown in England (from 5 November) and extension of the furlough scheme (CJRS).  The JSS will come into force when the extended furlough scheme ends (currently anticipated to be 31 March 2021).

The Chancellor has announced changes to the Job Support Scheme which will make it more attractive for many employers facing reduced demand due to COVID restrictions, as well as cash support for some businesses in Tier 2 areas.

Job Support Scheme

The JSS for businesses which are legally required to close as a result of local or national restrictions ('JSS-Closed') remains unchanged. For these employers, HMRC will fund 2/3 of employees' wages up to a cap of £2,100 per employee per month for any period of closure of 7 days or more.

The JSS for businesses which remain open will now be more generous (and has been rebranded as 'JSS-Open').  

Which employees are eligible for JSS-Open?

• To be eligible, employees must work at least 20% of their usual hours (rather than 1/3, as previously announced).
• The employee must have been employed on 23 September 2020 and a RTI payroll submission must have been made for that employee on or before that date.  Employers can submit claims in respect of employees who were in employment on 23 September 2020 and who have since left, providing they rehire them.  
• Employees can be on any type of contract, including zero hours, and need not have been furloughed previously. 

Which employers are eligible to participate? 

• Small or medium employers (with fewer than 250 employees) are eligible for the scheme.
• Large employers are eligible for the scheme if they can show that their turnover (as reported on their VAT returns) has decreased or remained static, compared with the same period in 2019.
• Organisations whose staff costs are fully publicly funded should not use the JSS.  Organisations can use the scheme if they are not fully funded by public grants, for the proportion of their revenue disrupted due to coronavirus.
• According to the Government's Policy Paper, participating employers should not make capital distributions while claiming the grant (although this will not be a legal requirement). 
• HMRC intends to publish the names of participating employers. 

How does the JSS-Open work?

• The employer's contribution to wages for unworked hours will now be 5% of the wages for the unworked hours, rather than 1/3 as previously announced. 
• HMRC's contribution to wages for unworked hours will be 61.67% rather than 1/3.   
• The employee will therefore receive 66.67% of their pay for their unworked hours, plus their usual pay for hours they work (which must be at least 20% of their usual hours), so the employee will receive at least 73% of their normal wages (subject to a cap). 
• The employer is responsible for paying employer NICs and employer auto-enrolment pension contributions on the full amount received by the employee, including the HMRC grant. 

HMRC's contribution will be capped at £1,541.75 per month per employee and can be claimed in arrears from 8 December 2020 via an online portal. The wages must already have been paid to the employee in order for the employer to claim the grant. Employers will need to bear this cashflow issue in mind when deciding whether to participate. 

Employers will be permitted to top up their contribution to pay for unworked hours (as a change to the previous guidance which indicated that this would not be possible).

Employers cannot claim for employees who have been made redundant or who are serving a contractual or statutory notice period.

Calculating hours and pay

As with the furlough scheme, employers will need to calculate reference pay and usual hours in order to calculate their claims. 

Reference pay

For employees on a fixed salary, the Reference Salary is the greater of:

• the wages payable to the employee in the last pay period ending on or before 23 September 2020; or
• the wages payable to the employee in the last pay period ending on or before 19 March 2020.

For employees whose pay is variable the Reference Salary is the greater of:

• the wages earned in the same calendar period in the tax year 2019 to 2020; 
• the average wages payable in the tax year 2019 to 2020; or
• the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020.

Usual working hours

For fixed hours employees, usual hours are calculated based upon the greater of:

• the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020; or 
• the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020.

For variable hours employees, the number of usual hours is calculated based on the higher of:

• the number of hours worked in the same calendar period in the tax year 2019 to 2020;
• the average number of hours worked in the tax year 2019 to 2020; or
• the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020.

Interaction with the Job Retention Bonus Scheme

Employers using the Job Support Scheme can also access the Job Retention Bonus Scheme. Grants claimed under the Job Support Scheme can be used by employers to pay an employee’s wages and help meet the wage threshold for the Job Retention Bonus.

Cash grants for businesses in Tier 2 areas

The Government is introducing a new grants scheme for businesses impacted by Tier 2 restrictions, even if they aren’t legally closed. Local Authorities will be given funding to allocate to businesses in hospitality, leisure and accommodation worth up to £2,100 (depending on the property's rateable value) for every month that Tier 2 restrictions apply. The grants can be backdated to August so that businesses which have been affected by enhanced restrictions since then will be eligible for a grant for the whole period of the restrictions.

This is in addition to the existing support for businesses which are legally required to close due to coronavirus restrictions. 

Support for self-employed individuals

The Government has also announced that support for self-employed individuals under the SEISS will be doubled.

Analysis

These changes will make the JSS-Open more attractive for many employers, as it substantially reduces the amount which employers need to pay for unworked hours.  The reduction in the minimum worked hours threshold will also make the scheme more accessible for employers still experiencing significantly reduced demand (particularly as Tier 2 and Tier 3 restrictions bite).

HMRC has stated that it will publish the names of participating employers, so businesses will need to take into account the reputational effect of participation.  However, businesses which decline to take up financial support may face disputes with employees if they subsequently need to make redundancies.