Understanding the New COVID-19 Job Support Scheme

By Catherine Hawkes / 28 Oct 2020

Employment associate Catherine Hawkes provides advice for business owners on the new job support scheme

On 24 September 2020, the UK Government announced a new Job Support Scheme (JSS) to aim to limit the number of redundancies and job losses which businesses are expected to face when the Coronavirus Job Retention Scheme (furlough scheme) comes to an end on 31 October.1

However, the JSS was faced with criticism as the scheme did not provide for employees who are unable to work because their employers are closed as a result of coronavirus restrictions.

As such, the Government has responded to this and announced a further JSS expansion scheme to provide support for businesses which are required by law to close as a direct result of coronavirus restrictions.1

On 22 October, HM Revenue and Customs (HMRC) published a policy paper containing more details on the JSS.1 The schemes will now be termed the ‘JSS Open’ for employers facing decreasing demand and ‘JSS Closed’, available for businesses that have been required to close due to coronavirus restrictions.

The schemes will be introduced on November 1, 2020 and will run for a period of six months until April 30, 2021.1 This article will explore the differences between JSS Open and JSS Closed, with considerations for your aesthetic practice.

 JSS Open

While many aesthetic clinics will continue to operate over the winter, due to local lockdowns, they may experience a decrease in demand. Therefore, the JSS Open will provide such practices with the option of reducing their employee’s hours without resorting to redundancies.

Which businesses are eligible?

JSS Open is available to businesses with a UK bank account and enrolled for PAYE online. All small and medium-sized enterprises (SMEs) are eligible.

However, large businesses (a legal entity with 250 or more employees across their payrolls on 23 September 2020) are required to demonstrate that their turnover is lower because of financial difficulties arising from COVID-19. Large businesses will need to meet a Financial Impact Test (FIT) to demonstrate that their turnover has remained equal or decreased in comparison to the previous year.1

Conditions of the JSS Open

The following conditions apply:

  1. Businesses can only claim for employees that were in employment on 23 September 2020.
  2. Employees cannot be made redundant, put on notice of redundancy or be serving notice during the period in which their employer is claiming the JSS grant on their behalf.
  3. The employee will be required to work at least 20% of their normal working hours (i.e. one day out of a five-day working week) and they will receive normal pay for the hours they work.
  4. The employee will receive 66.67% of their normal pay for the hours which they do not work. This will be made up of contributions from their employer and the Government as follows:
  • The employer will pay 5% for the hours not worked, up to a maximum of £125 per month.
  • The Government will pay the remaining 61.67% for the hours not worked, up to a maximum of £1,541.75 per month.

The caps are based on a monthly reference salary of £3,125.

As such, this will ensure employees earn a minimum of at least 73% of their normal wages, where they earn £3,125 a month or less.

By way of example:

  • Lucy typically works five days a week for an aesthetic clinic and earns £1,500 a month. The clinic is experiencing a reduction in patients due to coronavirus. Rather than making Lucy redundant, the clinic puts Lucy on the Job Support Scheme, working 20% of her usual hours.
  • Her employer pays Lucy £300 a month for these hours (20%).
  • For the time Lucy is not working (80%) she will get 66.67% of her pay for this time. Her total wage package is 73%, equal to £1,095.
  • The Government will give a grant worth £740 (61.67% of hours not worked) to Lucy’s employer to support the clinic in keeping Lucy’s job. Her employer will pay a further £60 for hours not worked (5% of wages)
  • In addition, the clinic will cover the Employer NICs and auto-enrolment contributions on the payment (£60).

Written agreement

If employers intend to utilise this scheme, it is essential that there is a written agreement between the employer and the employee agreeing to these changes as it will amount to a variation of their contract, for which consent is needed.

The agreement will need to be retained by the employer for five years and should be made available to HMRC if requested. A record will need to be made of how many hours the employee has worked, along with the hours which they are not working.

If a business wants to take advantage of the scheme as early as 1 November 2020, it is important to have letters in place by that date in order to be eligible to claim.

JSS Closed

The second scheme adopted by the Government is the JSS Closed. In the event that businesses are legally required to close their premises as a direct result of the COVID-19 restrictions, assistance will be provided through supporting the wage costs of employees who have been instructed to cease work. This scheme will support businesses to protect employee’s income and limit redundancies so that businesses can open as soon as possible.1

Which businesses are eligible?

JSS Closed is available for businesses with a UK bank account and enrolled for PAYE online on or before 23 September 2020. Businesses are not eligible under the scheme if there is no legal requirement to close premises and they have done so voluntarily due to reduced demand. Further details on eligibility will be provided at the end of October and businesses should check the latest requirements.

Conditions of the JSS Closed

  1. Businesses can only claim for employees that were in their employment on 23 September 2020.
  2. Eligible employees are those whose primary workplace has been legally required to close as a direct result of COVID-19 restrictions. Further, they must have been instructed to cease work for a minimum period of at least seven consecutive calendar days.
  3. Under the JSS Closed, employees will receive two thirds of their normal pay funded by the Government to a maximum of £2,083.33 per month. Businesses will have the discretion to pay more than this if they choose to do so.
  4. Employers will be required to cover employer NICS and automatic enrolment pension contributions in full.
  5. It is imperative to have a written agreement in place with the employee agreeing to the changes. The agreement must be retained for five years and made available to HMRC if requested. 

Final considerations

If you consider that either scheme could be beneficial to your business, it is important to check your businesses eligibility under each scheme. You should also review any current redundancy consultations. If your business could benefit from the JSS Open, it will not possible to make any redundancies, so consideration should be given to whether the JSS Open/Closed can be viably used as an alternative to redundancies to ensure a fair process has been followed.2 Also consider whether you will be ‘topping up’ employees’ pay and prepare a new short-time working agreement, notifying employees of the change. Finally, plan ahead to the end of each scheme on April 30, 2020 and take employment advice early on should you require.

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