1st November – UPDATE – Extended furlough scheme
The government announced yesterday that the JSS Open and Closed schemes will be delayed. As the nation enters another month of lockdown the furlough scheme will be extended until December, with the August government support levels being reinstated – that is 80% of salary to cap of £2,500 per month with employers responsible only for the employment costs for National Insurance and minimum pension contributions. All employers and employees can access the extended CJRS from November, whether or not they previously used the scheme. We will publish more on the extended CJRS shortly.
23 October – Updated ‘JSS Open’
Although details are still awaited, the Chancellor confirmed yesterday that the JSS scheme (from now on known as ‘JSS Open’), which will commence 1st November and will run for 6 months, will be more generous than originally announced.
The core changes are as follows:
- Employees will now only need to work and be paid normally by their employer for at least 20% of their normal hours, not 33% as originally announced.
- For the remaining unworked hours, the government will provide up to 61.67% of the employee’s normal wages, up to a monthly cap of £1,541.75, not £697.92 as originally announced.
- The employer must pay the employee for 5% of the unworked hours, not 33% as originally announced.
The extended JSS for businesses required to temporarily close their premises is not affected by the 22nd October announcements. This scheme will now be known as ‘JSS Closed.’
Eligibility criteria also remain the same – all SME businesses may use the scheme (irrespective of whether they furloughed employees) and larger businesses will have to prove their turnover reduced during the pandemic, and because of it. Eligible employers will still be able to claim the Job Retention Bonus for employees who were previously furloughed and were not made redundant, nor under notice of redundancy.
At the time of writing, none of the .gov guidance had been updated (though eagle eyed barrister Daniel Barnett has spotted an HMRC direction just published), so our analysis of the scheme is still provisional and subject to confirmation from the government. However, our interpretation of the key points of the scheme, for now, is as follows:
From 1st November the CJRS will be replaced by the Job Support Schemes JSS Open and JSS Closed. Under JSS Open (the subject of the remainder of this article) an SME employer of an eligible employee who is not under notice of redundancy and who works at least one-fifth of their normal hours, will receive a grant from the government equivalent to 61.67% of the normal pay for the time not worked, subject to a cap of £1,541.75 per month.
- Employers can use the new JSS and claim payments from the Job Retention Bonus Scheme.
- Employees do not have to have been furloughed for their employer to benefit from the scheme.
- Employees must have been on payroll with an RTI submission present on or before 23rd September 2020.
- Employees must not be under notice of redundancy.
- Employees must work and be paid ‘normally’ for at least one fifth (20%) of their normal contractual hours.
- ‘Normal’ earnings will follow the CJRS methodology with variable hours workers pay being determined either by 2019 – 2020 P60, or an actual average of the month before March 2020 if this is higher. For fixed hours workers ‘normal’ pay will be the higher of the pay period before March 2020 or the last pay period ending on or before 23 September 2020
- The government will meet 61.67% of normal hours not worked subject to a cap of £1,541.75 per month.
- The employer will be required to meet 5% of normal hours not worked.
- Employers will be able to top up their share of the unworked hours if they choose to ( a change to earlier guidance which said they would not be able to top up.)
- Employers will need to ‘agree’ short-time working with staff, issuing amendments to employment contracts in writing. Again this will be easier for those employers who have short-time working clauses in their employment contracts. Under CJRS there was considerable debate about what constituted ‘agreement’ with an eventual decision that notification was sufficient (which falls short of an agreement.) In the case of the JSS, the factsheet issued by .gov expressly mentions ‘agreement’ which is a higher hurdle.
- Employees can cycle on and off the scheme and working hours can vary (subject to the required ‘agreement’ being in place) but employees must work a consistent pattern for a minimum 7 day period.
- The scheme will run November – end April 2021, the government may review the minimum ‘20% of hours to be worked’ rule with a view to increasing the minimum threshold.
- Claims can be made monthly from 8th December in a similar way to CJRS claims.
The above is for general information only and subject to publication of full .gov guidance.
If our understanding is correct, then the following examples hold true:
Example 1: Beth normally works 5 days for £350 per week. Her employer engages her for 40% of her normal hours, paying her £140, £210 short of her normal weekly earnings. Her employer will pay 5% of the shortfall (£10.50) and the government will pay 61.67% of the shortfall (£129.51) meaning that Beth earns £280 for the week, 80% of her normal earnings. The total cost to the employer is £150.50 (plus employment costs.)
Example 2: Atif normally works 5 days for £1,000 per week. His employer engages him for 20% of his normal hours, paying him £200, £800 short of his normal weekly earnings. His employer will pay 5% of the shortfall (£40) and the government will pay 61.67% of the shortfall (£493.36) meaning that Atif earns £733.36 for the week, 73.3% of his normal earnings. The total cost to the employer is £240 (plus employment costs.)
NOTE for example 2 if Atif’s short-term working continued for a whole month, the government cap of £1,541.75 would be applied. In a whole month @ 20% short-time working, his employer would pay him £866.67, the shortfall would be £3,466.66, of which his employer would pay 5% (£173.33) and the government would pay the cap of £1,541.75, meaning that Atif earns £2,581.75 for the month, 59.6% of his normal earnings. The total cost to the employer is £1,040 (plus employment costs.).
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