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Employer Guide: The Job Support Scheme

With cases on COVID on the rise again and the Job Retention Scheme (JRS) coming to a close at the end of October we’re finding employers are confused about the support available to help keep their employees paid. Our simple guide helps explain current guidance as of 23rd October 2020 on the new Job Support Scheme (JSS). Things are changing so to ensure you are kept up to date with the most recent information sign up to our newsletter by clicking here.

What, When, Where?

Currently the JRS is still in place and will run until 31st October. Any employee who has previously been furloughed can be put back on furlough or flexible furlough until the end of the month. Currently there is no support for employees who have not been previously furloughed until November.

From the 1st November employers can use the new Job Support Scheme;

JSS The Open Scheme where the employee works a fifth of their normal working hours (up originally from a third of their normal working hours) o Employee receives at least 73% of their normal wages o Employer pays for hours worked along with 5% of normal rate for unworked hours and employer’s pension and national insurance cost

JSS The Closed Scheme for companies forced to close due to government guidelines. o Employee receives 67% of normal wages o Employer covers cost of employer’s pension and national insurance cost only.

Which Scheme Can Your Business Use?

The matrix below shows which schemes you can take advantage of depending on your business type and the restriction tiers you fall within at any relevant time.

Business Type Tier 1 Rules Tier 2 Rules Tier 3 Rules Full Lockdown / Circuit Breaker
Businesses forced to close due to COVID restrictions (excludes those that choose to shut) ✓ JRS

✓ JSS The Open Scheme

✓ JSS The Closed Scheme
Small and medium sized businesses (less than 250 employees) ✓ JRS

✓ JSS The Open Scheme

x JSS The Closed Scheme
✓ JRS

✓ JSS The Open Scheme

x JSS The Closed Scheme
✓ JRS

✓ JSS The Open Scheme

x JSS The Closed Scheme
✓ JRS

✓ JSS The Open Scheme

✓ JSS The Closed Scheme
Larger Business (more than 250 employees) **Only if can show lowered turnover
✓ JRS

✓ JSS The Open Scheme

x JSS The Closed Scheme
**Only if can show lowered turnover
✓ JRS

✓ JSS The Open Scheme

x JSS The Closed Scheme
**Only if can show lowered turnover
✓ JRS

✓ JSS The Open Scheme

x JSS The Closed Scheme
**Only if can show lowered turnover
✓ JRS

✓ JSS The Open Scheme

✓ JSS The Closed Scheme
Fully funded organisations Like the JRS these organisations are not expected to use the JSS as they are fully funded. This is different is they receive private funding and this has been negatively impacted due to COVID

 

Which employees are eligible for the Job Support Scheme?

  • The employee must be on the RTI submission on or before 23rd September 2020
  • Includes part time workers, zero-hour workers and agency workers
  • Employees do not need to have been furloughed before to be eligible.
  • Employees must be on either JSS scheme for a minimum of 7 days.
  • Employees who are being made redundant or who are working their notice cannot be included in the scheme.
  • Employees on the scheme can be taken off the scheme and then made redundant.
  • Employees on the JSS can still qualify for the Job Retention Bonus ** Employees must still earn about £520 per month in November – January to qualify.

 

How Does the Job Support Scheme Work?

JSS – The Open Scheme

• An employee must work at least a fifth of their normal working hours. Working includes work and training hours. We await confirmation but expect like flexible furlough that holiday hours will be considered unworked hours.

• The employee is paid two thirds for their unworked hours. The employer pays 5% of their normal rate for these hours with the government contributing 61.67% to cover the two thirds. The government grant is capped at £1541.75 per month. Employers can top up above the 5% but do not have to. Employers may want to do this for low paid workers to ensure eligibility for the Job Retention Bonus.

• The employer must also cover the cost of employer’s national insurance and pension.

• A written temporary working agreement must be in place and copies available for HMRC if needed.

• The grant will be reclaimed in a similar way to the JRS but can only be done in arrears. Employers must run payroll and pay employees before receiving the grant. A grant will be payable each month to employers. The portal will open from 8th December for November claims.

JSS The Closed Scheme

• This scheme can only be used when an employee can’t work because of government restrictions resulting in business closure.

• The employee is paid 67% of their normal wage. The government covers the 67%.

• The employer must also cover the cost of employer’s national insurance and pension.

• A written agreement between the employer and employee must be in place and copies available for HMRC if needed.

• The grant will be reclaimed in a similar way to the JRS but can only be done in arrears (if you are a client of CE Back Office we will do this on your behalf).

A Working Example

Louise works 40 hours per week at £10 per hour and normally gets £400 gross per week. She works for a restaurant who are currently under tier 2 restrictions. They are open but facing reduced workload for to restricted turnover.

Until 31st October Louise’s employer takes advantage of flexible furlough as Louise was furloughed before 30th June 2020.
From 1st November Louise is then put on a The JSS Open Scheme. She works 8 hours a week which is a fifth of her normal hours.

Louise is paid her normal rate for the hours worked.
8 x £10 = £80
Louise is paid two thirds of her normal rate for hours not worked.
32 x £6.67 = £213.44
Louise receives a total gross pay of £293.44 – this is 73% of her normal wage.

Her employer can claim back 61.67% of her normal hourly rate for unworked hours.
32 x £6.17 = £197.44 grant from the government
Her employer will have to contribute 5% of her normal hourly rate for unworked hours
32 x £0.50 = £16
They will also have to cover employer’s national insurance and pension on all of her earnings; National Insurance = £17.17
Pension = £5.20
Total employer cost = £118.37.

How Will Changing Hours Worked Impact an Employee’s Gross Pay and Employer’s Cost?

The table below shows the impact of hours worked on employee’s gross earnings, cost to the employer and the government grant via the job support scheme. **Please note employer cost excludes employer’s national insurance and pension contributions but is a good indicator to help employers plan for changing workloads.

Proportion of Hours Worked Employee gross pay compared to normal pay Employer contribution of normal pay ** Government Grant
One fifth73%25%58%
Two fifths80%43%37%
Three fifths87%62%25%
Four fifths93%81%12%
All hours worked100%100%0%

If you require further support around furlough other payroll related needs get in touch with us today.