Job Support Scheme: A Guide for Employers

The JSS: what do we know as at 25th October 2020?

Please note: This is an entirely new scheme, the rules and details of which are subject to change and further clarification. We will of course update the guidance as soon as more information is known. Please contact us for answers to any specific questions or issues relevant to your business.   

Since the original announcement about the Job Support Scheme there have been various changes, brought about by pressure from businesses but also as a result of the ever-changing landscape and restrictions brought about by the Covid-19 pandemic.

The Scheme has now been separated into two schemes: JSS Open and JSS Closed.

JSS Open provides support to those businesses who need it as a result of the ongoing difficulties caused by Covid-19 but who are still able to trade and operate.

JSS Closed is for those businesses who have to close because of a legal requirement brought about by lockdown restrictions, specifically aimed at those businesses in the Tier 3 areas for whom it is mandatory for them to close.

1. Job Support Scheme: Relevant to both the Open and Closed scheme

• It is available to all SME’s and there is no requirement to demonstrate a loss as a result of the coronavirus in order to claim.

• Large businesses – those with 250 or more employees must meet a financial impact test.Financial impact will be measured using the businesses VAT returns. Further details about how the financial impact test works can be found here: https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme

• Employers cannot claim for an employee who has been made redundant or is serving notice during the claim period.

This is a major change to the Coronavirus Retention Scheme or Furlough scheme, where you can claim for an employee’s notice period and if you are making them redundant.

• The scheme will run for 6 months, with reviews to be made (probably after 3 months) on the scheme rules, and notably it is expected that there will be a review on the requirement for an employee to work at least 20% (JSS Open) in order to be able to claim.

• To be able claim for an employee they must have been on the payroll between 06/04/19 – 23/09/2020. This means that there must have been an RTI submission for the employee at some point during that period.

• Employees do not have to have been furloughed previously in order to make a claim for them.

• There is a minimum claim period of 7 days.

• Large businesses are discouraged (but interestingly not prohibited) from making a capital distribution, such as a dividend, during a period that they are claiming under the JSS.

• Claims are to be made in arrears with the first claims from the 8^th December 2020.

• Employers must have paid the full amount that is being claimed to the employee before each claim is made.

2. Job Support Scheme: Open

The key features of the scheme are:

• An employee must work a minimum of 20% of their normal hours in a 7-day period to be able to claim for them.

• Employees should receive normal pay for hours worked.

• Employees will receive a minimum of 66.67% of their normal pay for the time they are not working.

• Employers are required to a pay 5% of wages for time not worked, plus NI and Pension on the payments.

• The government will pay 61.7% to employers for the hours that an employee is not working.

• There must be a written agreement between employer and employee on order for an employer to make a claim.

3. Job support Scheme: Closed

• A business must be required to close, by law, in order to make a claim under the Closed scheme.

• Employees are not required to work during the claim period.

• Employees will receive two thirds of their normal wages, up to a maximum of £2,083.33 per month.

• The full amount payable to the employee can be claimed from the government, meaning employers do not have to make any contribution to the wages.

• Employers are however required to pay NI and Pension contributions.

• There must be a written agreement between employer and employee in order for an employer to make a claim.

Temporary Work Agreement

4. Calculating reference salary for JSS Open

(copied straight from .gov guidance)

The amount an employer should use for calculating an employees’ reference salary is made up of the regular payments they are obliged to make, including:

• regular wages
• non-discretionary payments for hours worked, including overtime
• non-discretionary fees
• non-discretionary commission payments
• piece rate payments

Calculations cannot include:

• payments made at the discretion of the employer or a client, where the employer or client was under no contractual obligation to pay, including:
• any tips, including those distributed through troncs
• discretionary bonuses
• discretionary commission payment
• non-cash payments
• non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay

Reference salary for employees with fixed pay

For employees who are paid a fixed salary, the Reference Salary is the greater of:

• the wages payable to the employee in the last pay period ending on or before 23 September 2020
• the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme
• Reference salary for employees with variable pay

For employees whose pay is variable the Reference Salary is the greater of:

• the wages earned in the same calendar period in the tax year 2019 to 2020
• the average wages payable in the tax year 2019 to 2020
• the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

5. Calculating Usual Hours for JSS Open

(copied straight from .gov guidance)

There are different calculations for working out an employee’s usual hours – fixed or variable.

Employees who work fixed hours

For employees contracted for a fixed number of hours and whose pay does not vary according to the number of hours they work, usual hours are calculated based upon the greater of:

• the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020

• the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention scheme (NB. if employees moved to part time working, this may be varied full details will be included in forthcoming Guidance)

This should include hours paid as annual leave and statutory leave.

Calculation example 1: fixed hours and fixed salary employee

An employee has worked full time, from Monday to Friday, for A Ltd since 2011, and is paid £2,250 gross at the end of every calendar month. The employee has always been contracted to work 37.5 hours per week. A Coronavirus Job Retention Scheme grant was not claimed for the employee.

A Ltd is a small employer and meets all the eligibility criteria to qualify for Job Support Scheme.

The employee enters into a JSS Open temporary working agreement with A Ltd on 2 November 2020 to work Mondays and Tuesdays (7.5 hours each day, equating to 15 hours per week) from 2 November 2020 to 31 December 2020, at which point the position will be reviewed. The employee’s pay for the working hours in November is £945.

A Ltd calculates the amount of the JSS Open grant for the pay period 1 November 2020 to 30 November 2020 (one calendar month).

The employee’s usual hours are calculated for the days on which the employee is on a JSS Open temporary working agreement within the pay period (2 November 2020 to 30 November 2020). The employee’s usual hours are calculated by A Ltd to be 155 hours:

The steps to calculate the fixed employee’s usual hours are:

1. The greater of the number of hours contracted for at the end of the last pay period before 23 September 2020 (37.5) and the number of hours contracted for at the end of the last pay period before 19 March 2020 (37.5): 37.5

2. Divide by the number of calendar days in the repeating working pattern, including non-working days: 7 37.5÷7=5.36

3. Multiply by the number of days which the employee is eligible to be claimed for under JSS Open: 29 days x 5.36 = 155.44 rounded to 155 usual hours.

The employee did not take any time off in November, so the actual hours worked in November are 67.5 hours. A Ltd calculates that the employee didn’t work for 87.5 hours of their usual hours for November.

To calculate the percentage of hours worked: (67.5÷155) x 100 = 43.55%

A Ltd checks that the employee can be claimed for under Job Support Scheme. In November, the employee worked for 43.55% of their calculated 155 usual hours for November. Because the employee is working at least 20% of their calculated usual hours for November, providing other Job Support Scheme conditions are met, a claim can be made for the employee.

A Ltd calculates the employee’s Reference Salary as £2,250 for the pay period. The maximum Reference Salary that can be covered under the scheme is £3,125 per calendar month. The cap does not affect the calculation here because the Reference Salary is less than £3,125.

To work out the overall amount that A Ltd must pay the employee for their non-working hours in each pay period:

1. Start with £2,250 (the reference salary for the pay period)

2. Divide by 30 (the number of calendar days in the pay period)

3. Multiply by 29 (the number of days subject to a Temporary Working Agreement in the pay period)

4. Divide by 155 (the number of usual hours for the JSS Open days in the pay period

5. Multiply by 87.5 (the number of non-working hours for the JSS Open days)

6. Multiply by 66.67% = £818.59

This is made up of a 5% employer contribution, and a 61.67% government contribution which A Ltd can reclaim.

To work out the government contribution to the employee’s pay for the non-working hours: 1. Start with £818.59 (the total pay for the non-working hours) 2. Divide by 66.67 3. Multiply by 61.67 = £757.20

The employee’s total gross pay for November will be £1,763.59 (£945 + £818.59).

Please note that these calculations are indicative. Full details of sample calculations will be available in guidance published at the end of October 2020.

Employees who work variable hours

The variable hours calculation applies if either:

• the employee is not contracted to a fixed number of hours

• the employee’s pay depends on the number of hours they work

For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the higher of:

• the number of hours worked in the same calendar period in the tax year 2019 to 2020

• the average number of hours worked in the tax year 2019 to 2020

• the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

This should include hours paid as annual leave and statutory leave.

The calculation of usual hours is not and cannot be altered if the employee is expecting to work more or fewer hours than this in the future.

For employees who are part of a flexible work time arrangement, employers should:

• not count as hours worked any hours that the employee worked but was not paid for because they accrued paid time off which they could take later

• count as hours worked any hours that the employee took as paid time off (‘flexi-leave’), which they had accrued by working additional hours at some other time

For employees who are paid per task or per piece of work done whose hours cannot be calculated in this way, hours can be estimated based on the number of ‘pieces’ produced and the average rate of work per hour, as per National Minimum Wage rules.

Full rules will be covered in guidance at the end of October.

Example calculation 2: employee with variable hours and variable pay

An employee has worked between 30 and 35 hours for B Ltd since they started their employment in January 2019. They earn £14.60 per hour and are paid every week.

B Ltd is a small employer and meets all the eligibility criteria to qualify for Job Support Scheme.

The employee enters into a JSS Open temporary working agreement on 12 November 2020 which takes effect from 12 November 2020 until 31 December 2020 when the position will be reviewed. B Ltd will continue to pay the employee £14.60 for each hour worked during this time.

The employee must work for at least 20% of their usual hours during the claim period. B Ltd calculates that the employee has worked for 42 hours between 12 November and 30 November and the number of usual hours is 90.

This is 46.7%, which is at least 20%, so (providing the other conditions are met) a claim can be made for this employee.

B Ltd calculates the amount of the JSS Open grant for the pay period 16 November 2020 to 22 November 2020 (7 eligible JSS Open days).

B Ltd calculates the number of usual hours based on the higher of:

• the number of hours worked in the same calendar period in the tax year 2019 to 2020

• the average number of hours worked in the tax year 2019 to 2020

• the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

B Ltd calculates the usual hours for this pay period as 33 hours.

The employee did not take any time off in the pay period, and B Ltd identifies the employee’s actual hours worked in the pay period to be 15 hours.

B Ltd calculates that the employee didn’t work for 18 hours of their calculated usual hours for the pay period.

B Ltd finds the higher of:

• the pay the employee earned in the period 16 November to 22 November 2019

• the average wages payable in the tax year 2019 to 2020

• the average wages payable from 1 February 2020 to 23 September 2020

B Ltd calculates the employee’s Reference Salary at £478.50 for the pay period. The cap does not affect the calculation because the Reference Salary is less than the weekly cap of £721.15.

To work out the overall amount that B Ltd must pay the employee for their non-working hours in each pay period:

1. Start with £478.50 (the reference salary for the pay period)

2. Divide by 7 (the number of calendar days in the pay period)

3. Multiply by 7 (the number of days subject to a Temporary Working Agreement in the pay period)

4. Divide by 33 (the number of usual hours for the JSS Open days in the pay period)

5. Multiply by 18 (the number of non-working hours for the JSS Open days)

6. Multiply by 66.67% = £174.01

This is made up of a 5% employer contribution, and a 61.67% government contribution which A Ltd can reclaim.

To work out the government contribution to the employee’s pay for the non-working hours:

1. Start with £174.01 (the total pay for the non-working hours)

2. Divide by 66.67

3. Multiply by 61.67 = £ 160.96

This employee’s total gross pay for this period is £393.01 i.e. £219 + £174.01. Please note that these calculations are indicative. Full details of calculations will be available in the guidance published at the end of October 2020.

What do you need to do now?

1. Notify employees who you are currently claiming for under the furlough scheme that this scheme is coming to an end, and that the previous agreement between you will now cease.

We have produced a free letter for you to use which you can download here: Free letter

2. Decide if you are going to claim under the Job Support Scheme for any employees.

3. Consider how it will work in practice and what it will cost the business.

4. Write to employees to seek their agreement to the temporary change in working arrangements and pay.

5. Retain the written agreement for 5 years.

This guide has been produced for information only. It should not be substituted for obtaining legal advice that is specific to the particular circumstances. The content is also valid as at the 25^th October 2020 & therefore you should ensure that you check the up to date position as this scheme, the guidance and employment law changes on a regular basis.