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What do the new changes and terms for the Job Support Scheme Open (JSSO) and the Job Support Scheme Closed (JSSC) include?

In recent previous updates we have briefed you on the government’s Coronavirus Job Support Scheme for open businesses (announced in late September) and its later, expanded offering for locked down businesses (announced in mid-October).

It has now been confirmed that these schemes will be referred to respectively as the Job Support Scheme Open (JSSO) and the Job Support Scheme Closed (JSSC). Both schemes will open on 1 November 2020.

Against the background of rapidly changing regional restrictions, and calls for further support from businesses still permitted to trade but facing drastically reduced demand, the government has now announced important changes to the JSSO, making the scheme significantly more generous.

Further details have also been released around eligibility for both schemes, and how much employers can claim.

JSSO: New terms

Under the government’s original proposals, employees of open businesses were required to work at least one-third (33%) hours, paid in full by the employer. Of the remaining two-thirds (67%) of total hours not worked, the employer was required to fund one-third (22%) with the government funding a further third (22%). The remaining third of the employee’s unworked hours (22%) was unpaid. So, an employee asked to work 33% of their usual hours would receive around 77% of their usual pay (33%+22%+22%).

However, under the new, more generous, scheme terms, the minimum hours an employee must work has been dropped down to one-fifth (20%). For the remaining four-fifths (80%) of total hours not worked:

  • The employer is expected to fund just 5% of unworked hours (to a cap of £125 per month). This represents around 4% of the employee’s total hours. The employer must also pay NICs/pension contributions on the total amount paid to the employee (including any government contribution).
  • The government will fund 61.67% of unworked hours, up to a cap of £1541.75 per month. This represents around 49% of the employee’s total hours.

So, an employee who is required to work 20% of their normal hours will receive around 73% of their normal pay (20% + 4% + 49%).

The contribution caps are set generously above median earnings, and will only ‘bite’ where an employee earns more than £3215.00 gross per month.

It is important to note that the £125 cap on employer contributions is voluntary, and employers may pay more if they wish to do so. The government has also confirmed that employers may at their discretion ‘top up’ an employee’s total pay by funding more than 5% of their unworked hours; It was unclear from previous guidance whether this would be permitted.

JSSC: New details

No changes have been made to the core terms of the Job Support Scheme for businesses in a period of mandatory closure (JSSC). As previously announced, the government will fund 67% of an employee’s normal hours, up to a cap of £2083.33 per month, where the employer is unable to trade due to local COVID restrictions. The employer will be expected to pay only the NICS/pension contributions due on this amount.

However, a newly published policy paper has firmed up the detail of the scheme. The government has now clarified that the JSSC will only cover the period for which closure is mandated by law, and not any further period that an employer chooses to remain closed.

It remains the case that an employee must not work at all for the employer in any period covered by a JSCC claim (although undertaking training is allowed). The closed premises must be the employee’s ‘primary workplace’ and the employee must cease work for at least 7 consecutive/calendar days.

Again, it has now been confirmed that employers may top-up staff pay under the JSSC if they wish to do so.  

JSSO/JSSC: Eligibility

Both job support schemes are open to SME’s and larger employers in all areas, across all COVID alert levels. As mentioned in our previous updates, an employer need not have used the furlough scheme to access either of the job support schemes.

All businesses, or whatever size, that are required to close, will be eligible for the JSCC, regardless of their financial circumstances.

However, to access the JSSO, larger employers (now confirmed as those employing more than 250 staff) must pass a ‘financial impact test’ to demonstrate that “turnover has stayed level or is lower now than before experiencing difficulties from COVID19”. There will be no financial impact test for charities, whatever their size.

Put simply, larger employers are required to compare their VAT returns with the equivalent period in the previous financial year to demonstrate a turnover which has decreased, or stayed the same. The exact requirements differ depending on how frequently VAT returns are usually submitted. The financial impact test need only be completed once, before the employer’s first claim.

Comment

Many employers currently permitted to trade but struggling with reduced demand, will no doubt welcome the increased government contribution to employee wage costs in the revised JSSO.

When the scheme was first announced, there was some scepticism about how effective it would be in supporting pressurised businesses to function, with many employers anticipating that they would not engage with the proposals. Although the new scheme may be slightly less generous to individual employees (who may receive a slightly lower percentage of their usual pay, this new, enhanced offering from the government is likely to be a far more attractive proposition to employers, in preference to early implementation of redundancies, and a potential lifeline for businesses in strained sectors such as hospitality.

It is important to remember that other sources of support are also available in parallel to these schemes. For example, the £1,000 Coronavirus Job Retention Bonus  (CJRB) remains available for each eligible employee retained by an employer until the end of January 2021, and various grant schemes can be accessed (in addition to the JSSO) by businesses struggling through the impact of Tier 2 restrictions in England.

If you need any assistance navigating the next phase of the ‘new normal’ we would be happy to advise you.

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Coronavirus Job Support Schemes (JSSO and JSSC): Q&A | Updated

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