Background to the new Job Support Schemes
As you probably remember, the initial wage subsidy offered by the Government to employees was called the Furlough Scheme. This scheme comes to an end at the end of October and claims for October need to be submitted to HMRC no later than 30/11/20. On 24 September the Government announced a replacement scheme called the Job Support Scheme. The idea was that this scheme would work by topping up the wages of staff employed on a part-time basis. Under the scheme it was envisaged that the company would pay the employee for the hours worked. The cost of hours not worked was to be split: 1/3rd employer, 1/3rd employee and 1/3rd Government. Because of the worsening situation this scheme has been improved so that there are now two alternative schemes – the Job Support Open and Job Support Closed schemes. Full details of the schemes can be found here:https://www.gov.uk/government/publications/the-job-support-scheme/the-job-support-scheme
New Scheme 1 – Job Support Open (JSS Open)
Under this scheme employees who work part-time (at least 20% of their usual hours) receive support. The level of support paid for by the government and employer is capped at £1,541.75/month and £125/month respectively.
How the JSS Open Scheme will work
The scheme will work as follows:
- the employer pays the employee as normal for the hours worked
- the employer needs to pay an additional 5% of salary for the hours not worked, up to a maximum of £125/month
- the Government pays an additional 61.67% of salary for the hours not worked, up to a maximum of £1,541.75/month.
- the Government’s contribution does not cover Class 1 National Insurance or pension contributions
- the company pays the Government’s portion to the employee and then claims it back from HMRC
- the employer can pay more if it wishes
Example of the JSS Open
John normally works 5 days a week and earns £2,500 a month. Because of reduced sales due to coronavirus his company agrees with him that he can work part-time, for 1 day a week. This amounts to 20% of his usual hours. John agrees to this because the alternative is that he will be made redundant. The amounts paid to John will be as follows:
- Paid by employer for days worked: £2,500×20% = £500/month
- Paid by employer for days not worked: £2,500×5% = £125/month
- Total paid by employer: £625/month
- Paid by Government for days not worked: £2,500×61.67% = £1,541.75/month
- John’s total gross pay: £2,166.75/month
Eligibility criteria
The eligibility criteria (in summary) are as follows:
- the employer has a UK, Channel Island or Isle of Man bank account
- the employee works for at least 20% of their usual hours
- the employee was on the employers PAYE payroll between 6 April 2019 and 11:59pm on 23 September 2020
- an RTI Full Payment Submission was made to HMRC at some point from 6 April 2019 up to 11:59pm 23 September 2020.
- Employers with 250 or more employees on 23 September 2020 need to demonstrate that their turnover has remained equal or fallen due to coronavirus
Other information
The Job Support Scheme will be open from 1 November 2020 and will run for 6 months, until 30 April 2021. It will be reassessed in January 2021. Employers will be able make their first claim from 8 December 2020.
New Scheme 2 – Job Support Scheme Closed (JSS Closed)
This applies to employers that have been legally required to close their premises because of coronavirus restrictions. In this case, 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, up to a maximum of £2,083.33/month. The employer can pay more than this if it wishes.
Eligibility criteria
Employers will be able to access the Job Support Scheme if:
- they have enrolled for PAYE online
- they have a UK, Channel Island or Isle of Man bank account
- their business premises at one or more locations has been legally required to close as a direct result of coronavirus restrictions
- this includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/ or drink outdoors
- the employee’s primary workplace is at the premises that has been legally required to close as a direct result of COVID
- the employee has been instructed to cease work for a minimum period of at least 7 consecutive calendar days
- the Government’s contribution does not cover Class 1 National Insurance or pension contributions
- the company pays the Government’s portion to the employee and then claims it back from HMRC
- the employer can pay more if it wishes
Employers are only eligible to claim for periods during which the relevant coronavirus restrictions are in place.
Fraudulent claims
HMRC have said that they will check claims and that if a claim is found to be fraudulent penalties of up to 100% of the amount overclaimed may be applied. HMRC. HMRC intend to publish the names of employers who have used the scheme so that the public can report fraud to HMRC.
Background to the new Job Support Schemes As you probab […]