Coronavirus Job Support Schemes (JSSO and JSSC): Q&A | Updated
This note answers some frequently asked questions based on the information currently available.
On 24 September 2020 the Chancellor Rishi Sunak, announced the Coronavirus Job Support Scheme for open businesses (JSSO), the successor to the similarly named Coronavirus Job Retention Scheme (CJRS), which closes at the end of October.
By way of further announcements in mid to late October, the government announced new enhanced support for employers using the JSSO, and a separate parallel scheme for businesses dealing with mandatory closure (known as the Coronavirus Support Scheme for closed businesses, or JSSC).
The stated aim of both schemes is to support viable jobs during the difficult post-furlough period, by encouraging employers to utilise short-hours working arrangements rather than making redundancies.
The scheme will take effect immediately as furlough comes to an end, running for a period of six months from 1 November 2020 to 30 April 2021 (with a review point in January 2021).
The key features of the schemes are set out in a HMRC policy paper and in the government’s Winter Economy Plan. This note answers some frequently asked questions based on the information currently available.
JSSO: Scheme terms
How much can our organisation claim while we remain open?
Under the JSSO, the government will subsidise the wages of employees who work at least one-fifth (20%) of their normal hours. The employer must pay wages in full for this work as usual.
For the remaining hours not worked, the employer will be expected to fund 5%. The government will fund 61.67% of the non-worked hours.
So, in other words, the employee will receive full pay (funded wholly by the employer) for one-fifth (20%) of their normal hours, or whatever greater proportion of their normal hours their employer requires them to work. The government will then fund 61.67% of the remaining non-worked hours, with the employer funding 5%.
The government will consider whether to increase the minimum 20% of employer funded hours after the first three months of the scheme.
The government’s contribution will be capped at £1541.75 per month. It is assumed, as with the CJRS, that this sum will be paid gross and subject to tax and NI in the usual way. The employer’s contribution of 5% of the employee’s unworked will be subject to a cap of £125 per month, although this is optional and the employer may pay more if they wish.
The government will not fund Class 1 NICs or employer pension contributions, which must be funded by the employer and will be payable on the whole sum paid to the employee (i.e. employer payments for hours worked, employer contribution to hours not worked and government contribution to hours not worked).
Can I ask employees to work more than 20% of their usual hours if there is work available?
Yes. 20% is the minimum employee working requirement for participation in the JSSO. You can ask employees to work a greater proportion of their usual hours if you have sufficient work available. However, remember that you must pay employees in full for any hours they actually work.
Will our organisation’s financial circumstances be taken into account when claiming under JSSO?
It depends on the size and nature of your organisation.
All SMEs and charities will be eligible for JSSO funding, regardless of their financial circumstances. However, larger employers will need to pass a ‘financial impact test’ to access funding. This involves comparing VAT returns with an equivalent period in the previous financial year to demonstrate that “turnover has stayed level or is lower now than before experiencing difficulties from COVID19”.
A ‘large’ employer is defined for these purposes as any organisation with over 250 staff, across it’s payrolls, as at 23 September 2020.
JSSC: Scheme terms
How much can our organisation claim if we are forced to close?
Under the JSCC, the government’s scheme for closed businesses, the government will fund two thirds, or 67%, of an employee’s normal pay to a maximum of £2,083.33 per month. The grant can be claimed for any period of mandatory closure due to local COVID restrictions (although any business forced to close due to an outbreak of COVID in that specific workplace will not be eligible).
Will our organisation’s financial circumstances be taken into account when claiming under JSSC?
No. All employers, regardless of size or financial circumstances, are able to claim under JSSC during a period of mandatory closure. No ‘financial impact test’ will apply. However, there is an ‘expectation’ that large employers will not make ‘capital distributions’ (for example, dividend payments to shareholders) whilst in receipt of JSSO/JSSC scheme funds.
Which employees will be eligible for JSSC funding?
For an employee to be eligible for JSCC funding, the closed premises must be their ‘primary workplace’ (although there is no prescribed test for this in the scheme rules we have seen so far). The employee must cease work for a period of at least seven consecutive/calendar days.
Employers can only claim for employees who were in their employment on 23 September 2020. The government’s policy paper suggests that, if an employee ceases employment after 23 September 2020, and is subsequently re-hired, they will also be eligible for JSCC funding. This also applies to the JSSO.
Can my business choose to close (rather than open at reduced capacity) in order to claim though the JSSC?
No. Only businesses “legally required to close” due to local COVID restrictions will be eligible. This includes businesses that remain open, but are legally required to change their offering (for example, restaurants restricted to delivery or collection-only services).
The JSSC will not apply to businesses that choose to close in any other circumstances, or which choose to remain closed once any mandatory closure period has ended. Any business required to close because of a specific workplace COVID outbreak will not be eligible.
Businesses will only be eligible for JSSC support while subject to restrictions. When legally allowed to re-open/open as normal, they must switch back to the less generous JSSO scheme.
JSSO/JSSC: Further details
Which staff are eligible under the JSSO/JSSC? Is the scheme restricted to employees only?
As with the CJRS, it appears that any member of staff who is paid by PAYE through an employer’s payroll system will be covered. This will include employees (both full-time and part-time); workers; and even zero-hours staff.
Agency workers can be placed on the JSSO/JSSC by employment agencies (as long as they are paid through PAYE).
Under the CJRS, office holders (including company directors), and salaried members of Limited Liability Partnerships (LLPs) were also be eligible for funding. Hopefully, future guidance will confirm whether these individuals remain eligible under the new scheme.
As explained above, employers can only claim for staff who were in their employment on 23 September 2020. The government’s policy paper suggests that, if an employee ceases employment after 23 September 2020, and is subsequently re-hired, they will also be eligible for funding.
A member of staff need not previously have been furloughed to be eligible for funding under either job support scheme.
What about the remaining part of the employee’s salary? Are we required/allowed to ‘top up’ employees to full pay under JSSO/JSSC?
It is clear that employers are not required to top up an employee’s pay to 100% under the job support schemes.
However, the government’s policy paper confirms that employers will be permitted to top up pay voluntarily, under either scheme, if they wish to do so. This is a welcome clarification, as the position was unclear when the job support schemes were first announced.
Under the CJRS/furlough scheme, employees were entitled to 100% of pay for periods of annual leave taken during periods of furlough/flexible furlough. It appears that this will remain the case under the job support schemes (subject to confirmation from the government). Further guidance is expected shortly which will hopefully clarify this point.
Do employees have to agree to take part in the JSSO/JSSC?
Yes. To be eligible for funding, employers must reach written agreement to temporary short-time working with their employees (or written collective agreement with a trade union, where the relevant terms are determined by collective agreement). The agreement must be retained for a period of 5 years and be available for inspection by HMRC on request. HMRC has promised further guidance shortly on what to include in this written agreement.
Employers must also maintain separate records of how many hours an employee work, and the number of ‘usual’ hours they are not working.
What are my options if an employee refuses to take part in the JSSO/JSSC?
This will depend on the circumstances of the refusal, and is advisable to seek legal advice if this situation arises.
Employees who refuse to take part in the job support schemes may potentially be candidates for redundancy, as you are likely to be able to demonstrate a diminished need for staff to work of a particular kind at a particular location. However, this may be unattractive as, hopefully, this decrease in demand will be short-lived.
Alternatively, it may be possible to terminate existing contracts of employment, and re-engage staff on new terms (although this should be done with extreme care and after taking legal advice).
These drastic options could potentially be sidestepped by engaging with staff and understanding their reasons for refusal. Perhaps they have been financially stretched by a long furlough period on 80% pay, and cannot afford to drop below this. In these circumstances, could your organisation afford to ‘top-up’ pay, to encourage employees to participate?
Please do not hesitate to get in touch if you require any support during this difficult period.
Can we move employees ‘on and off’ the JSSO/JSSC?
Yes. Government guidance suggests that, as with furlough, employees can be cycled on and off either scheme. However, each individual period of participation in either scheme must last a minimum of seven consecutive/calendar days.
Can our organisation access both schemes at the same time? Can we claim under both schemes in respect of a single employee?
Yes – an employer can claim under the JSSO and the JSSC at the same time for different employees (for example, if one or more work location is under mandatory closure and others are not).
An employer can claim under both schemes at different times, in respect of the same employee (for example, if an employer is able to provide short-hours work to an individual one week, but is unable to do so the next week due to mandatory premises closure).
The only exclusion is that an employer cannot claim for a single employee under both schemes at the same time.
Can our organisation claim both JSSO/JSSC funding and the Coronavirus Job Retention Bonus (CJRB) at the same time?
Yes. Employers will be able to simultaneously access both the job support schemes and the separate Job Retention bonus scheme (where a ‘one off’ payment of £1,000 can be claimed for every previously furloughed member of staff who remains continuously employed up to 31 January 2021).
Can we use the JSSO/JSSC for an employee who joins our organisation through TUPE?
This is currently unclear. On the basis of the information currently available, it appears that employers may not access the job support schemes in respect of employees who join under TUPE after the ‘cut-off’ date of 23 September 2020. However, further guidance may be forthcoming on this issue.
JSSO/JSSC and redundancy
Can we use the JSSO/JSSC for an employee who is working their redundancy notice period?
No. This is a key area of difference between the job support schemes and the preceding CJRS scheme. The emphasis of the new scheme is on protecting ‘viable’ jobs which are capable of surviving the COVID crisis.
Employees may not be made redundant, or be given or serve notice of redundancy, during any period in which JSSO/JSSC funding is being claimed for them.
It is not yet clear whether employers will be able to claim for employees who are under notice for a reason other than redundancy (for example, due to retirement, the termination of a fixed-term contract, or where they have resigned).
Can we carry out redundancy consultation while claiming funding from the JSSO/JSSC?
There is nothing in current guidance to preclude employees from being made redundant following a JSSO/JSSC funded period, or to prevent collective redundancy consultation taking place while subsidies are being claimed from the scheme (as long as a notice of termination is not issued during that period).
Making a claim
What is the mechanism for claiming funding under the scheme? Must an employer pay employee’s wages up-front in order to claim them back later?
As stated above, The scheme will be open from 1 November 2020 to 31 April 2021. Government guidance states that employers will be able to make a claim online through Gov.UK from 8 December 2020 (five weeks after the scheme opens).
Grants will be payable on a monthly basis in arrears. A claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
Final claims will be made in May 2021 in respect of April 2021, the final month of operation of both schemes.
JSSO/JSSC: Working out what to claim
How do we work out our employee’s ‘usual’ hours and pay for JSSO/JSSC purposes?
The recently published HMRC policy paper explains how to calculate an employee’s ‘usual’ hours and pay for the purposes of the JSSO/JSSC.
This follows a ‘similar methodology’ to the CJRS scheme, although some details are slightly different. The methodology differs for employees with fixed hours and/or fixed pay, and for employees who work variable hours and/or receive variable pay.
Importantly, employees who have previously been furloughed, will have their underlying usual pre-furlough pay or hours used to calculate usual wages, not the amount they were paid while on furlough.
Please do not hesitate to contact us for support if you are unsure about how to calculate employee hours and pay for the purposes of the job support schemes.
JSSO/JSSC and annual leave
Can an employee take holiday while on the JSSO/JSSC? What should they be paid?
We will need to wait for further guidance for a detailed explanation of the relationship between the job support schemes and annual leave. However, it is likely that the position will be similar to flexible furlough. We anticipate that employees will be permitted to take annual leave during a JSSO/JSSC funded period without jeopardising an employer’s claim.
Currently, government guidance on the CJRS states that employees must receive 100% of pay for periods of annual leave taken during periods of furlough/flexible furlough. This may remain the case under the job support schemes (subject to confirmation from the government).