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23rd October 2020 – Chancellor announces changes to the Coronavirus Job Support Scheme

Principal Solicitor, Paul McGowan

On Thursday 22nd October 2020, the Chancellor announced further changes to the Coronavirus Job Support Scheme and the Government produced a Job Support Scheme Policy Paper later in the day. What is clear from these new changes is that the Job Support Scheme will now be much more appealing to employers, who will likely need to reconsider whether it will viable for them to use the Scheme, especially if they are currently undertaking a redundancy process.

Having now reviewed the new guidance, I have set out a summary below.

  • There will be two version of the Scheme. There is the “JSS Open” and “JSS Closed”. The JSS Open will be used where employees are working part-time and the JSS Closed will be used where employers’ places of work are legally required to close due to local lockdown measures.
  • Employees must work at least 20% of their normal hours. Employees will receive 66.67% of normal pay for hours not worked, made up of 5% from the employer and 61.67% from the Government (up to a max of £1,541.75 per month). Where employees earn £3,125 a month or less, this means they will receive 73% of normal wages overall.
  • Employees under JSS Closed will be paid 2/3 of their normal hours fully funded by the Government up to £2,083.33.
  • An employer can claim for the JSS Open and JSS Closed at the same time for different employees. An employer can’t claim for both schemes in respect of an employee on the same day. Therefore, by implication, it suggests an employer can make a claim for both in respect of one employee so long as they are on different days.
  • Bodies in receipt of public funds should use public money to pay staff and not use the CJSS, except for where organisations are not fully funded by public grants, in which case they should contact their sponsor department or respective administration.
  • If employees ceased employment after 23rd September 2020 and were subsequently rehired, then employers can claim for them.
  • Employers can top up employee wages above the level of minimum contributions if they wish – but there is no obligation on them to do so.
  • The Government is intending to introduce parental pay legislation to avoid parents losing out on entitlement to parental pay as a result of being put on the CJSS during the assessment period. Further guidance is due on this by the end of October. This may likely mirror the existing legislation in respect of employees under the CJRS.
  • The Schemes are open to all SMEs. Large businesses, being those that employ more than 250 people, may be able to claim if they undertake a “Financial Impact Test” that shows their turnover has remained equal or fallen due to the effects of coronavirus. There appears to be an exemption for charities who employ over 250 people, so there is no need for these types of organisation to undertake a Financial Impact Test. Employers with under 250 employees are eligible so long as some or all of their employees are working reduced hours (at least 20% of hours).
  • To be eligible for the Scheme, employers must have reached written agreement with their employees and this should be available on request to HMRC. The agreement must cover at least 7 consecutive days. The Government will be publishing further guidance on what these agreements require by end of October.
  • For the JSS Closed, employers need their primary workplace to have been legally required to close and for the employer to instruct employees to cease work for a minimum period of at least 7 consecutive days. Again, this comes with the caveat that this isn’t a complete list of employee eligibility requirements and further guidance is coming by end of October.
  • CJSS won’t cover NICs or pension contributions – these remain payable by employer.
  • Employers will be able to make their first claim from 8th December 2020 on Gov.UK. Importantly, the Government has indicated there will be more detail about the process to follow by the end of October.
  • The guidance provides example calculations, but again with the important caveat “these calculations are for JSS Open and are indicative. Further details of calculations employers need to do to work out their claim will be available in the guidance published at the end of October 2020”. In summary:
    • Employers can claim for government support for employees’ wages up to a max of £1,541.75 per month;
    • Claims are subject to a max reference salary of £3,125 per month;
    • Regular wages, non-discretionary payments, fees and commission payments are included for reference salary calculations;
    • Discretionary payments, tips, bonuses, non-cash payments and non-monetary benefits are all excluded for reference salary calculations;
    • Specific calculation methods are provided for employees with fixed and variable pay. These seem to mirror furlough calculations, so these may be familiar to employers who have had to do these type of calculations previously; and
    • The guidance provides detailed examples about calculating usual hours for those working fixed or variable hours.

You can read the Government guidance published on 22nd October in full here. In particular, it may be useful to review the calculations at the end of the guidance to understand how the Government envisages these will work.

We have been advising employers on the Job Support Scheme and delivered a webinar earlier this week to set out the key points of the Scheme. Please get in touch with us if you would like assistance with placing employees on the Scheme by contacting us on 0191 282 2880 or by email to paul.mcgowan@collingwoodlegal.com .

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