As the ability to furlough employees under the Coronavirus Job Retention Scheme (CJRS) rapidly comes to an end, employers will need to consider whether they can, and wish to, benefit from the Government’s two additional schemes: the Job Retention Bonus, and the Job Support Scheme.
Now that some of the finer details of these alternatives have been released by the Government, we provide a summary for employers below. It is also worth noting that since we wrote this article, the Chancellor has announced a further amendment to the Job Support Scheme:
- The minimum hours required to be worked by employees has reduced to 20%, meaning that employees working as little as one day a week are now eligible for the scheme.
- Additionally, the employer contribution to the ‘unworked’ hours has been significantly reduced from 33% to just 5%. This could have a huge impact on businesses and enable more employees to be kept in work.
- The schemes will now be known as JSS Open and JSS Closed, the latter being for those businesses which have been required to close under lockdown regulations. Further details of JSS Open and JSS Closed can be found in the HMRC Policy Paper here.
Job Retention Bonus
Put simply, the Job Retention Bonus is a £1,000 one-off taxable payment made to employers, for each eligible employee retained until 31 January 2021. The Bonus does not have to be paid on to the employee.
The following specific rules apply:
- An eligible employee, for which the Bonus is payable, is an employee who:
- has been on furlough at some point;
- is continuously employed until 31 January 2021;
- is not serving contractual or statutory notice; and
- is paid at least £1,560 per tax month between 6 November 2020 – 5 February 2021.
- A claim for the Bonus needs to be made between 15 February and 31 March 2021. No claims will be accepted before or after these dates. Further guidance on how to claim is expected by the end of January 2021.
- The Bonus can be claimed for individuals who are not employees, like office holders or agency workers, provided they have met the eligibility criteria above.
- Sadly, for those businesses who repaid the government for furlough grant monies under the CJRS, the Bonus cannot be claimed for applicable employees.
- An employer can still claim the Bonus if it makes a claim for the employee under the Job Support Scheme, discussed below.
Job Support Scheme
The Job Support Scheme is designed to protect ‘viable jobs’ in businesses who are facing lower demand due to the COVID-19 pandemic. The Scheme is certainly not as generous as furloughing under the CJRS and operates differently. Ultimately, an employer will continue to pay its employee for any time worked, but the burden of hours not worked will be split between the employer and the government (through wage support) and the employee (through a wage reduction), helping the employee to keep their job.
As always, the devil is in the detail. In summary:
- All employers with a UK bank account and PAYE scheme can use the Scheme; however, large businesses (currently undefined) will need to meet a financial assessment test to use the Scheme. Neither the organisation nor individual need to have previously used furlough.
- To be eligible, employees must be on the employer’s Real Time Information submission on or before 23 September 2020.
- For the first three months of the Scheme, the employee must work at least 33% of their usual hours. After this time, the government may increase this minimum hours threshold.
- Employees can go on and off the Scheme and working patterns can vary, but each short-time working arrangement must cover a period of at least seven days.
- Employers must agree the new arrangement with participating staff in writing. This agreement must be available to HMRC on request.
- Employees must receive full pay from their employer for hours worked. For each hour the employee does not work, the employee will receive 2/3 of their usual pay with both the government and the employer paying a third each. The government contribution will be capped at £697.92 per month.
- Employer’s NIC and pension contributions will not be covered by the Scheme.
- Importantly, employees cannot be made redundant or put on notice during the period within which the employer is claiming under the Scheme.
- The Scheme will open on 1 November 2020 and will run for six months, until April 2021. We await further detailed guidance.
Job Support Scheme – Local COVID Restrictions
The Chancellor announced on Friday 9 October that the Job Support Scheme will be expanded to support businesses required to close due to local COVID-19 restrictions. We are awaiting full guidance, but the headline points are:
- The Government will pay two thirds of employees’ salaries, up to a maximum of £2,100 per month.
- Employers will not be required to pay any wages, but will be required to cover NIC and pension contributions.
- Businesses will only be eligible while they are subject to restrictions and employees must be off work for a minimum of seven consecutive days.
- The expanded Scheme will begin on 1 November, will be reviewed in January, and will be available for six months. The claims service should be available from early December.
If you have any questions about the content of this article, please do get in touch with the Employment Team at Coffin Mew.