Coronavirus Job Support Scheme

Coronavirus Job Support Scheme

This post is based on the information available as at 23rd October 2020.  The scheme, as originally launched, has already undergone a significant change to the benefit of employers and it may yet change again in which case this post will be updated or a further post added.

The scheme is known as the JSS OPEN Scheme and is designed to protect viable jobs. It begins on 1st November 2020 and will run until 30th April 2021, subject to a review 3 months into the scheme.

There is also a JSS CLOSED scheme which is only for organisations that have been forced to close by a government imposed lockdown.  Specifically, it does not apply to organisations which have chosen to close because of a downturn in trade.  At the time of writing this does not apply to the Haslemere Chamber of Trade & Commerce area as no organisations are statutarily obliged to close.

Importantly, the JSS OPEN scheme is NOT available for any employee who is working their redundancy notice, whether statutory or contractual.  The information is clear that this applies to redundancy notice so, by extension, it could be assummed that if an employee is working their notice for any reason other than redundancy then the scheme will apply. But this might change.

Eligibility:

  • In order to be eligible for the scheme the employer must have a UK bank account and a UK PAYE scheme.
  • To be eligible for the scheme, the employee for which a claim is being made must have been on the payroll as at 24th September 2020.
  • It is not necessary for the employee to have previously been furloughed.
  • Because this scheme is aimed primarily at SMEs, large buinesses with 250 employees or more will have to undergo a financial assessment test in order to show they have suffered a downturn.   Details of that test are available at https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme.
  • The scheme does not apply to public sector organisations.  This is because public sector wages are already paid by government.

What are claims based on?

  • Claims are based on a gross maximum reference salary of £3,125 per calendar month, effectively £37,500 per annum.  This figure is inclusive of non-discretionary commission and/or non-discretionary bonus payments and non-discretionary overtime.
  • Calculations do not include discretionary payments and non-monetary payments such as company cars.
  • Employees on salaries greater than £37,500 will have to forego wages over and above that figure.

Employers will need to take great care not to discriminate in their selection of who should and who should not be asked to participate in the scheme. For example those on higher salaries are likely to be older members of staff so you might be tempted to ‘protect’ them from loss of salary by only placing younger members of staff on the scheme which could amount of age discrimination.

How does it work?

  • Employees must work a minimum of 20% of their contractual hours over a 7 calendar day period.  For clarity, that is 20% of their contractual hours and not the hours they may have been working whilst on furlough, if they were furloughed.
  • Employers will have to pay the salary for those 20% (or more) hours.  Payment for the remaining hours will be split
    • with the employer paying 5% of the remaining hours
    • Government paying 61.67% up to a maximum of £1,541.75 per month per employee
    • The employee will have to forego any difference after the above has been applied.
  • Employers will be responsible for National Insurance and Pension contributions on the entirety of the payments made to employees.

There are worked examples of calculations at https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme.

If your employees work variable hours the reference salary will be the greater of :

  • the wages payable to the employee in the last pay period ending on or before 23rd September 2020
  • the average wages payable in the tax year 2019 to 2020; or
  • the average wages payable from 1st February 2020 (or the employee’s start date if later) until 23rd September 2020.

If you decide to participate in this scheme it represents a contractual variation for the employee so you must get their agreement in writing.  The mantra “if it is not written down it didn’t happen” should always apply.

How will an employer recoup the grant?  The money will be recouped from HMRC in arrears from 8th December 2020 onwards.  A claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.  So you will have to find all the money and then recoup it from HMRC at a later date.

What if the employee is on annual leave?  If the employee is on annual leave they will not be working the necessary 20% minimum hours and will therefore be entitled to 100% of their salary.  For clarity, you will not be able to claim from the scheme for annual leave hours because no hours have been worked.

Employers will need to factor this in when agreeing to – or imposing – annual leave over the Xmas and New Year period.

What if the employee is on sick leave or isolating?  They will be entitled to Statory Sick Pay in the normal way if they are absent for 4 days or more.  You will not be able to claim from the scheme as no hours will have been worked.

If the employee is on sick leave for just a day or two then they may be able to work their 20% hours in the remainder of the week and therefore remain within the scheme.  If you have not paid the employee for their couple of days sick leave you will need to take care when submitting your claim to HMRC as the calculation will be different.

Can I top up an employee’s pay to 100%  The government says it does not ‘anticipate’ employers topping up employees’ salary but there is nothing to say that you cannot top up wages to 100%.

Can I run a redundancy consultation during this scheme?  Yes, the scheme will not pay for an employee who is working their redundancy notice but redundancy consultation should be designed to prevent redundancy so therefore, during consultation, the employee should not be working their redundancy notice.

If you have placed an employee(s) ‘at risk’ they have not been dismissed, just warned that they might be dismissed at a later time.  They are therefore not working their redundancy notice period and can be on the scheme.

Can an employee move back and forth between normal working hours and the Job Support Scheme?  Yes.  You could rotate employees through the scheme.  So, an employer could have an employee on the scheme for one week then bring them back to their normal contractual hours and place another employee on the scheme for a week.  Thus, you can rotate your employees through the scheme and spread the pain of having to forego salary.

B&D Roper Ltd is here to help with all your HR problems.  Contact us on 07766 167160 or through our website at www.bdroper-hr.co.uk 

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