The Chancellor has today announced increased support for employers under the new Job Support Scheme (JSS). The Government subsidy available under the JSS has been more than doubled while the contribution required from employers has been significantly reduced.
The JSS is a Government-funded scheme that provides a partial contribution to wages for employers whose operations are affected by the COVID-19 pandemic. It is due to begin on 1 November, following the closure of the furlough scheme on 31 October. The JSS envisages employees working reduced hours except where the employer's business is required to close under local or national restrictions. When originally announced, the JSS would have seen employers paying 55% of wages for employees working 33% of their normal hours, with a Government top up of up to 22% capped at £697.72 per employee per month.
Under the new JSS:
- For businesses which can remain open, employees will be required to work at least 20% of their normal hours to be eligible (instead of the 33% originally proposed).
- Employers will be required to pay for the hours worked as usual, plus a further 5% of wages for hours not worked up to a cap of £125 per employee per month.
- The Government will contribute up to a further 61.67% of wages for the hours not worked, up to a maximum of £1,541.75 per employee per month.
- The Government contribution will not cover employer national insurance or pension contributions and employers will remain liable for these on the whole amount payable to employees.
For example, an employee who normally earns £1,100 per month who works 20% of their hours under the JSS would be paid £220 by their employer for hours worked. For hours not worked, the employer would pay £44 and the Government would fund £543, so that the employee receives £807 in total. In percentage terms, the employer pays 24% of wages, while the Government contributes 49% so the employee receives 73% of their normal wages.
Other features of the JSS remain unchanged, namely:
- Employers will need to agree the temporary working arrangement for shorter hours with employees and notify them to the employee in writing (in a similar way to agreeing furlough arrangements).
- Employees can cycle on and off the scheme but any reduced hours arrangement needs to last at least seven days at a time.
- The employee's usual hourly rate would be calculated using similar methods as used under the furlough scheme.
- The employee must be on the payroll at 23 September (i.e. the employer made an RTI submission to HMRC in respect of the employee on or before 23 September).
- The scheme will be open to small and medium employers, regardless of their financial position but large employers (with 250 or more employees) will have to show turnover has stayed level or is lower due to COVID-19.
- Employers will not be able to make employees redundant during the time they are claiming for them under the JSS (but they could make other employees redundant if they are not claiming under the JSS in respect of them).
There is enhanced Government support under the JSS for employers who are legally required to close their premises as part of local or national restrictions. Where employers are required to close, the Government will contribute two thirds of the normal wages for any employees unable to work due to the closure, up to £2,100 per employee per month. Employees must be off work for a minimum of seven consecutive days to be eligible. In these circumstances, employers will not be required to contribute towards such wages but will be required to cover employer NICs and employer pension contributions on the amounts paid to employees.
The JSS will open on 1 November and run for six months, with a review after the first three months of operation.
The Government plans to publish a list of all employers who use the JSS, so that employees and members of the public can report fraud.
We are expecting detailed guidance on the JSS in the coming days and will provide further information when we receive it. If you would like to discuss the implications of the scheme for your business, please get in touch with your usual Employment team contact.