The Job Support Scheme – more detailed information

As you know, yesterday the Chancellor announced changes to the Jobs Support Scheme to extend the amount of Government support available.
We now a bit more information on the scheme or in fact two schemes, JSS Open Grant, which will apply to businesses still trading and JSS Closed Grant, which will apply to businesses forced to close due to local or national lockdowns.
The Job Support Scheme will be open from 1 November 2020 and run for 6 months, 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.

Which employees are eligible?

The new scheme is open to all employees, even if they were not previously furloughed.
The HMRC Guidance states:
“Eligible employers will be able to claim the Job Support Scheme grant for employees who were on their PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020. This means 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.
Employers can only claim for employees that were in their employment on 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them.
An individual is an employee for the purposes of this scheme if they are treated as an employee for Income Tax purposes.
Employees can be on any type of contract, including zero hours or temporary contracts”
Employees on notice of redundancy are not eligible for the scheme (unlike the furlough and flexible furlough schemes) and that will apply up to and including 1^st February 2021.
You must have a signed JSS Agreement in place with your employees to be eligible to participate in the scheme. We have drafted a template agreement and it’s in the Advice Line folder together with other documents to support the JSS process. Please keep an eye on this Dropbox folder as we will regularly update the documents (we have done two updates in the last 24 hours!) and add new ones as more guidance is published. If you would like us to produce individual JSS Agreements for your employees, we are happy to do so for an additional admin charge. 

JSS Open Grant

To be eligible, employees must work a minimum of 20% of their normal weekly hours (previously announced as 33%) and will be paid as normal for those hours. This will apply for the first 3 months of the scheme with the Government reserving the right to increase this after that time.
Alongside this, the employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government. The employer will pay 5% of reference salary for the hours not worked, 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. This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.
Employers will pay NICs and Pension contributions on all payments made.
“Usual wages” calculation will follow a similar methodology as the CJRS.
Employees can cycle in and out of the scheme (similar to flexible furlough) and need not have a fixed pattern although each short-time working arrangement must cover a minimum of 7 days.
An employer can claim the JSS Open and JSS Closed grant at the same time for different employees. An employer cannot claim for a single employee under both schemes at the same time.

JSS Closed Grant

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 coronavirus restrictions set by one or more of the four governments of the UK. 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 coronavirus restrictions are in place. Employers will not be able to claim JSS Closed to cover periods after restrictions have lifted and the business premises is legally allowed to reopen. They may then be able to claim JSS Open if they are 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 .
The full guidance currently available can be found here (and we strongly suggest you read this):
https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme

Working Out How Much to Pay

The following is an extract from the HMRC guidance which we thought to useful to draw your attention to:
Reference salary
Under JSS Open, employers can claim for government support for their employees’ wages (including employees on National Minimum Wage) – up to a maximum of £1,541.75 per month, depending on how many hours they work. This section applies to JSS Open and the further guidance at the end of October will set out how to work out reference salary for JSS Closed.
Employers cannot claim for employees’ wages for any time they spend working.
Claims should commence 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. Claim periods can start from 1 November 2020 onwards. Claims are subject to a maximum reference salary of £3,125 per calendar month.
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 payments
• 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

5.2 Usual hours
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.
5.3 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.
 

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