HMRC Policy Paper – Job Support Scheme (JSS)

Wednesday, October 28th, 2020

Job Support Scheme (JSS) - James Collier from Hanne & Co's Employment team provides an update on the UK Government Job Support Scheme following the recent publishing of an HMRC policy paper.

The UK Government updated the Job Support Scheme provisions and on 22 October HRMC released a Policy Paper, The Job Support Scheme (“JSS”). This note provides an update on the JSS and should be read in conjunction with our earlier 20 October article on the subject.

The Policy Paper provides much more detail about the updated Job Support Scheme and how it will apply in practice.

Businesses that are operating but facing decreased demand can get support for wages through JSS Open. Those businesses that are legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK can get support through JSS Closed.

Under the JSS Open, employers that employ less than 250 employees (SME employers), and larger employers that have suffered a reduction in turnover are eligible to claim from the JSS Open a contribution towards the wages of PAYE employees’/workers’ unworked hours. Under JSS Closed, SME and larger employers are entitled to claim 100% of their employees’ wages relating to unworked hours, due to the legal closure of the workplace by any of the four UK Governments.

Employees and workers who were entered onto the employers PAYE system by midnight on 23 September 2020 are eligible to be part of the JSS.

 

JSS Open

The Policy Paper provides that:

The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked. Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government. The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish. The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.

The Policy Paper identifies that changes have been made to this element of the JSS scheme first proposed by the UK Government, these are:

  • The employee must work a minimum of 20% of their usual (normal) working hours and receive usual wages for the hours they work – this was 33% in the original scheme.
  • The employee will receive two thirds of their usual wages up to a maximum cap which takes effect on earnings over £3,125 per month.
  • The employer must pay to the employee/worker their usual wages for the two thirds of any unworked time and can then claim back from the Job Support Scheme 61.67% of the reference salary for any hours not worked, up to a maximum of £1,541.75 per month.
  • The employer contribution to the payment of wages for any hours not worked is now 5%, up to a maximum of £125 per month – this was 50% of the wages for any unworked hours in the original scheme – plus any employer NI and pension contributions on the full amount of wages paid to the employee.
  • The employer has discretion to “top-up” the employees’ wages beyond that provided for by the JSS and eligibility for the employer to claim under the JSS will not be affected

 

JSS Closed

The Policy Paper sets out the objectives of JSS Closed and how it will operate as follows:

Employers who have been legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK can claim for their employees’ wages for unworked hours under the JSS Closed. For these businesses JSS Closed will help them through the period that they are directly affected by these restrictions by supporting the wage costs of employees who have been instructed to cease work in eligible (closed) premises.

Each employee who cannot work due to these restrictions will receive two thirds of their normal pay, paid by their employer and fully funded by the government, to a maximum of £2,083.33 per month, although their employer has discretion to pay more than this if they wish. This will help protect employee incomes, limit unemployment and retain employer-employee matches so that these premises are able to reopen as quickly as possible when circumstances allow.

Employees may also be entitled to additional financial support, including Universal Credit.

So, under JSS Closed the following will apply:

  • The JSS grant covers 100% of the contribution toward the employees’ wages relating to the unworked hours, up to a maximum of £2,083.33 per month;
  • The employer has discretion to top-up the employee’s wages beyond that provided for by the JSS Closed.

 

Principles that apply to both JSS Open and JSS Closed

  • Employers and employees will need to be clear about what are the usual working hours, referred to as “normal working hours”, and the usual monthly wages, termed “Reference Pay”. Only then can the JSS grant calculation be carried out accurately.
  • Employees and workers who are on the employers PAYE payroll system before midnight on 23 September 2020 are eligible to be part of the Open and Closed JSS.
  • Employees can be on any form of contract including zero hours and agency workers (whose employer is deemed to be their agency).
  • Employees entered onto the JSS must receive the appropriate amount in wages from the employer in the usual way, the JSS grant monies must only reimburse sums already paid to the employee.
  • Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme.
  • Employers cannot claim both Open JSS and Closed JSS in respect of an individual employee for the same day.
  • Employees are eligible to undertake voluntary training during a period of unworked hours paid for by the JSS
  • Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
  • Employers must deduct and pay to HMRC income tax and employee NICs on the full amount that is paid to the employee, including any amounts subsequently met by a scheme grant.
  • Employers must also pay to HMRC any employer NICs due on the full amount that that is paid to the employee, including any amounts subsequently met by a scheme grant.
  • Employers must report these payments via a Full Payment Submission (FPS) to HMRC on or before the pay date in the normal way.
  • Employers and Employees must also still pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped saving into their pension. If applicable, Student Loan deductions and the Apprenticeship Levy must also still be paid.

 

We hope this – read in conjunction with our earlier JSS article – summarises the main points to note for employers and employees interested in or affected by the JSS (Open and Closed).

If you are an employee or employer and require employment law advice on the operation of the Job Support Scheme, or any other employment related matter, please do give us a call on 020 7228 0017 to discuss things through.

 

James Collier is a Senior Associate in Hanne & Co’s Employment Law team.