Job Support Scheme
On 22 and 23 October 2020, the Government made several changes to the Job Support Scheme, intending to help struggling firms that have not been required to shut, after criticism that some companies would be better off in Tier 3 rather than Tier 2. It also became clear that the Government is making a clear distinction between JSS Open and JSS Closed (which applies only to those businesses which are required to close due to Tier 3 restrictions.)
The following should make the distinction between both clear for you.
JSS Open
- Employees must work at least 20% of their hours to qualify;
- Employers will pay 20% of normal pay for hours worked, and an additional 5% of hours not worked, plus NI contributions;
- The Government will fund 61.67% of hours not worked, subject to a cap for those earning more than £3,125 a month.
- There must be a written agreement between employer and employee, agreeing to the changes.
JSS Closed
- The business must be required to close by the Government (eg. mostly those in the hospitality sector). This is widely criticised as it only applies to those businesses required to close, and not those businesses’ suppliers (eg. cleaners, drinks companies etc).
- The Government will fund two-thirds of an employees’ pay, subject to the cap on those who earn more than £3,125 per month.
- The employer only pays tax and National Insurance.
- Again, there must be a written agreement between employer and employee, agreeing to the changes.
Rules for both Schemes
- Employers can top up wages beyond the amounts provided in the scheme; this is a change, as the first version of the JSS indicated government expectation was that employers would not top-up wages beyond the scheme.
- All SMEs are eligible, and large businesses are eligible if their turnover has fallen due to coronavirus. The Government says it discourages a large business from claiming on the JSS if it is making dividend payments.
- Fully funded public sector employers cannot claim, but public sector employers who receive funding at least in part from private sources can claim if their private funding has been disrupted.
- Employers will claim in arrears for salary monies already paid. The first claims can be made from 8 December 2020 via an online portal.
- Employers cannot claim for an employee who has been made redundant or is serving their notice during the claim period. It is unclear whether this covers employees serving notice for reasons other than redundancy.
Time will tell whether the new Scheme(s) receives more traction and support than the previously proposed version, which was widely criticised as too expensive for employers to use.
An example scenario
An example scenario could be, your full-time employee works Monday to Friday, and is paid £2,250 gross at the end of every calendar month. Your employee has always been contracted to work 37.5 hours per week. A Coronavirus Job Retention Scheme grant was not claimed for the employee (although this would have no impact on any ability to claim under either Scheme).
You are a small employer and you meet all the eligibility criteria to qualify for the Open Job Support Scheme. You agree with your employe to enter into a JSS Open temporary working agreement 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.
You calculate the amount of the JSS Open grant for the pay period 1 November 2020 to 30 November 2020 for one calendar month.
How to do the calculations
Your employee’s usual hours are calculated for the days the employee is on a JSS Open temporary working agreement during the pay period, 2 November 2020 to 30 November 2020.
The steps to calculate the fixed employee’s usual hours are:
- 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
- Divide by the number of calendar days in the repeating working pattern, including non-working days: 7 37.5÷7=5.36
- 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. Therefore your 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%
Because your employee is working at least 20% of their calculated usual hours for November a claim can be made for the employee.
Let’s say your employee’s Reference Salary as £2,250 for the pay period. The maximum Salary that can be covered under the scheme is £3,125 per calendar month. So this doesn’t affect the employee as the reference salary is less than the maximum. Still with us?
To work out the overall amount that you must pay the employee for their non-working hours in each pay period:
- Start with £2,250 (the reference salary for the pay period)
- Divide by 30 (the number of calendar days in the pay period)
- Multiply by 29 (the number of days subject to a Temporary Working Agreement in the pay period)
- Divide by 155 (the number of usual hours for the JSS Open days in the pay period
- Multiply by 87.5 (the number of non-working hours for the JSS Open days)
- Multiply by 66.67% = £818.59
This is made up of a 5% employer contribution, and a 61.67% government contribution which you can reclaim.
To work out the government contribution to the employee’s pay for the non-working hours:
- Start with £818.59 (the total pay for the non-working hours)
- 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).
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