As part of the COVID-19 winter support package, the Government has announced details of the new Job Support Scheme (JSS) which will succeed the Coronavirus Job Retention Scheme (CJRS). Smith & Williamson can support you to understand the requirements of the scheme and to process claims on your behalf.
As CJRS support draws to a close on 31 October 2020, after supporting businesses since April at an estimated cost of £3.5 billion a month, the JSS will aim to protect viable jobs and support the worst affected businesses during the winter months. In summary, from 1 November 2020 the Government will subsidise the pay of employees working fewer hours due to lower demand. Where employees can work at least a third of their normal hours, their employer will continue to pay for the hours they work; for the hours the employees cannot work, the employer and the Government will each cover a third of the pay (although the Government grant will be capped at £697.92 a month per employee). The Scheme will run for six months until the end of April 2021 and can be claimed in addition to the Job Retention Bonus. Further information will be announced by the Government on the salary cap and eligible businesses.
Who can participate?
The Scheme is available to all employers with a UK bank account and UK PAYE scheme and they do not need to have previously claimed CJRS support to be eligible. Although the exact eligibility criteria for employers is yet to be announced, all small and medium enterprises (SMEs) will be able to claim support, while larger businesses will only be eligible if their turnover has fallen as a result of Covid-19. Furthermore, large businesses are not expected to be able to make capital distributions, such as dividend payments or share buybacks, whilst claiming the grant.
Eligible employees will include those on payroll (with a Real Time Information (RTI) submission made) on or before 23 September 2020. As the support is targeted at maintaining viable jobs, employees must work at least a third of their usual hours for the first three months. After the first three months this threshold may increase.
Employees will not be required to work in the same pattern each month and they can cycle on and off the scheme, but each reduced time working arrangement must cover at least seven days.
What can be claimed under the scheme?
Unlike CJRS, employer National Insurance and pension contributions will not be reimbursed, although they will remain payable by the employer. The employer will be able to claim for a third of the hours not worked by the employee, but they must also pay a third as well. Overall, this means that where the Government contribution has not been capped, an employee working 33% of their usual hours will receive 77% of their normal pay with the government contributing 22% and the employer covering 55%. The Government contribution will be paid by the employer and claimed back from the Government in arrears. It is not expected that employers will be able to top up the payment for hours not worked to more than two thirds of normal pay.
“Usual” pay calculations will be similar to those in place for CJRS calculations and those employees who have been furloughed will have their usual pay applied, rather than their furlough pay.
Employers will not be able to make employees redundant or put them on notice of redundancy whilst making grant claims for the employee.
How can you claim?
The scheme will open from 1 November and claims will be processed from December 2020 onwards, on a monthly basis. It is anticipated that a similar process to that used for the CJRS will be adopted.
Grants will only be paid after the payment to the employee has been made and that payment has been reported on an RTI return.
Where necessary, employment contracts should be amended to reflect the updated scheme. These can only be amended by agreement with employees, who must be notified in writing. HMRC are intending to inform employees directly of the detail of the claim and strict HMRC checks will be in place.
How can Smith & Williamson help?
Our team can support you in assessing whether you are eligible to make a claim and assist with your claim calculations. We can support you in processing the claim and ensuring that all compliance obligations are maintained.
Once further details of the scheme are announced, our team will be able to support you in understanding the impact this will have on your business and provide guidance on the requirements for large businesses.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.