The government is canvassing opinion on options to reform the law governing the use of...
Job Support Scheme
It was the intention to have a new scheme - the Job Support Scheme - take over from the Coronavirus Job Retention Scheme when this was originally scheduled to end.
However with the extension of the CJRS until March 2021, the JSS is on hold. It's not currently known whether it has been postponed or scrapped. The main elements of the JSS as originally announced are summarised below.
There are two schemes within JSS providing different types of support: JSS Open where the business is allowed to remain open but still impacted by COVID-19 and JSS Closed where the business is impacted by COVID-19 and the employer is forced by one of the four governments to close (other than those forced to close by Public Health for a ‘specific coronavirus outbreak’).
- The definition of employee is the same as for the CJRS and is one treated as such for income tax purposes, including those on zero hours or temporary contracts, agency workers treated as employees by agencies and those who ceased working after 23 September and have been rehired (but not before).
- Employers can top up minimum payments under both schemes.
- Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period
- Organisations which are fully funded by public grants cannot use the scheme but those who are partly funded can but must talk to their sponsor.
- There is no requirement for the employee or employer to have used the CJRS scheme and an employer can claim under the JSS Open and JSS Closed scheme for different employees in the same period or the same employee for different periods.
- For the JSS Open scheme those companies employing 250 or more employees as of 23 September 2020 who are not a registered charity (or a charity exempt from registration) must pass a financial impact test. Those employing fewer than 250 on 23 September 2020 do not have to pass this test.
- The Job Support Scheme will be open from 1 November 2020 and run until 30 April 2021. The government will review the terms of the scheme in January. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved.
- Employees will be able to check if their employer has made a claim for them by logging into their personal tax account.
HMRC guidance materials
On Friday, 30th October, HMRC published various guidance documents on the scope of the JSS as follows:
- Check if you can claim the JSS
- Claim the JSS
- Check if you can claim the JSS Closed if your business is closed
- Check if you can claim the JSS Open if your business is still operating
- Individuals you can claim the JSS for who are other types of employees
- Calculate how much you can claim through the JSS
- Steps to take before calculating your claim through the JSS (Open and Closed)
- Check how different employment conditions affect eligibility for the JSS (Open and Closed)
- Find examples to help you calculate your employee’s wages for the JSS
- Extra steps to take before calculating your claim though the JSS Open
- Complete a Financial Impact Test if you’re a large employer claiming through the JSS Open
- The employee will need to work for a minimum of 20% of their usual hours for a minimum of seven consecutive calendar days.
- The employer will continue to pay them as normal for the hours worked.
- The employee will receive 66.67% of their normal pay for the hours not worked made up of 5% of reference salary for the hours not worked, paid by the employer, 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.
- The calculation of salary appears to be the same as for the CJRS and worked examples are provided. The maximum ‘reference’ salary is £3,125.
- Employers have been legally required to close their premises as a direct result of COVID-19 restrictions set by one or more of the four governments of the UK (but not by local authorities).
- This includes those restricted to delivery or collection only and those restricted to the provision of food and/or drink outside.
- Businesses required to close by local health authorities because of ‘specific workplace outbreaks’ are not eligible.
- 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.
- Employees must have been instructed to and have ceased working for a minimum period of seven consecutive calendar days.
Criteria to be eligible for JSS Open and JSS Closed
- Only available for 'employees' which are the same as for the CJRS and are those treated as an employee for income tax purposes and on any type of contract, including zero hours or temporary contracts. Agency workers are regarded as employees of an employment agency for the purposes of this scheme, provided they are employees for income tax purposes.
- Neither the employer nor the employee needs to have benefited from the CJRS to be eligible for the JSS.
- Employers must be enrolled for PAYE online and have a UK, Channel Island or Isle of Man bank account.
- Employees who were on their PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020 (an RTI Full Payment Submission notifying payment in respect of that employee must have been made to HMRC at some point from 6 April 2019 up to 11:59pm 23 September 2020).
- The employer must still pay pension (unless the employee has opted out or stopped saving into their pension) and NI contributions and deduct income tax and employee NI contributions from payments made to employees. If applicable student loan deductions and the apprenticeship levy must also still be paid.
- All money claimed under the scheme must be paid to the employee and no fee etc charged by the employer. Employers can still make authorised deductions from salary such as charitable contributions.
- Employees must have been in employment on 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them but not if they ceased employment before then.
- Employers cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.
- Claims are for a minimum period of seven consecutive days under both schemes.
- The government will introduce parental pay legislation as soon as possible (covering maternity allowance, statutory maternity/ paternity, shared parental, adoption and parental bereavement pay) to avoid parents losing out on their statutory entitlements to parental pay as a result of being put on the JSS.
- Women can return early from maternity leave to join a scheme but they will have to give eight weeks' notice and cannot join the scheme for eight weeks.
- Large employers (250 or more employees as at 23 September 2020) and their corporate groups using the scheme must not make capital distributions whilst claiming under the JSS. This includes dividends, charges, free or other distribution, any equivalent payment that a partnership may make to its partners. This is not a legal or contractual condition of the scheme, but large employers are urged to ‘reflect on their responsibilities’.
- Employees will be able to check if their employer has made a Job Support Scheme claim relating to them via their Personal Tax Account.
- Employers can claim the Job Retention Bonus for any employee on the JSS if they are eligible.
Additional criteria for JSS Open
- An employer with 250 or more employees on 23 September 2020 must have undertaken a Financial Impact Test before claiming for the first time. They must demonstrate their turnover has remained equal or has fallen to show they have been adversely affected due to COVID-19.
- An employer with fewer than 250 employees on 23 September 2020 is not required to satisfy this test
- Any charity with 250 or more employees that is registered with a UK charity regulator or are exempt from such registration will not be required to carry out the test.
- Some or all of their employees are working for at least 20% of their usual hours.
- Employees can do training in working hours while being claimed for under the JSS. Hours that employees spend training are paid for by the employer at their full rate of pay and will count towards 20% of their usual hours.
- Employees will be able to undertake training voluntarily in non-working hours but must be paid a minimum wage entitlement and if this is in excess of the grant payment, employers will need to pay the additional wages.
- Employees whose hours reduce due to COVID-19 will continue to have access to Working Tax Credit and its childcare element for the duration of the JSS scheme.
- Claims should start from the later of the date that the employee starts working reduced hours or the date when working reduced hours is confirmed in writing, not when the decision is made.
JSS Open - Financial Impact Test
- Large employers who are VAT registered and submit quarterly VAT returns, should compare the total sales figure on their VAT return, which is due to be filed and paid between 31 August 2020 and 7 November 2020, with the total sales figure from the same quarter in 2019. This is the figure recorded in box 6 of their VAT return which captures all sales, whether subject to VAT or not.
- Large employers who submit monthly VAT returns should compare the three consecutive months which are due to be filed and paid by 7 November 2020 with the same period in 2019.
- Large employers who file less frequently should compare the three consecutive months which are due to be filed and paid by 7 November 2020 with the same period in 2019 but will need to have submitted a VAT return between 31 August 2020 and 7 November 2020 to be eligible.
- Large employers who are part of a VAT group will use the turnover figures for the VAT group for this calculation.
- Government guidance contains worked examples of the Financial Impact Test.
JSS Open - temporary working agreements
- To be eligible for the grant, employers must have provided a written agreement to their employee (or reached written collective agreement with a trade union) detailing the temporary working agreement reached - it does not have to set out the actual hours agreed and so can be flexible. The agreement does not need to be signed by the employee although we recommend it is as proof.
- The agreement must be available for view by HMRC on request and kept for five years.
- This temporary working agreement must cover at least seven consecutive calendar days.
- The employer must keep records of how many hours employees work and the number of usual hours they are not working
- HMRC will publish a check list of what needs to go in there on 6 November 2020 - six days after the scheme starts!
Additional criteria for JSS Closed
- Employers are eligible to claim JSS Closed if their business premises at one or more locations has been legally required to close as a direct result of COVID-19 restrictions set by one or more of the four governments of the UK but not by local authorities.
- The employer has instructed to and who cease work for a minimum period of at least 7 consecutive calendar days
- This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/or drink outdoors.
- Businesses premises required to close by local public health authorities as a result of ‘specific workplace outbreaks’ are not eligible for this scheme.
- Employers are only eligible to claim for periods during which the relevant COVID-19 restrictions are in place. They may then be able to claim JSS Open if they are eligible.
JSS Closed - temporary working agreements
- There should be a written agreement with their employee (or written collective agreement with a trade union) that they have been instructed to and agree to stop working for a minimum of seven consecutive calendar days. The agreement must be available for five years to be viewed by HMRC on request.
- The employee must agree to this arrangement – they are not obliged to sign it but we recommend that they do, especially if their salary is being reduced as this will be needed to avoid an unlawful deduction from wages claim.
Fraudulent claims made under either JSS Open or JSS Closed
- Payments may be withheld if HMRC suspects a claim to be ineligible.
- The amount of any overpayment by the employer must be paid back to HMRC where a claim contains incorrect information.
- The full amount of any grant must be repaid if a claim is found to be fraudulent. Penalties of up to 100% of the amount overclaimed may be applied. HMRC will consider publishing the details of employers who are charged a penalty because of a deliberately incorrect JSS grant claim.
- HMRC intend to publish the names of employers who have used the scheme. The public can report fraud to HMRC if they have evidence to suggest an employer is abusing the scheme.
- Employees will be able to check if their employer has made a claim relating to them via their Personal Tax Account.