The Government has announced important changes to the new Job Support Scheme (JSS). In this article we summarise the changes made by the Chancellor to the new JSS scheme, which is due to replace the furlough scheme on 1 November 2020.
The package announced is available for all businesses across the UK, regardless of their location and Covid restrictions. Their aim is to make the scheme more generous to employers, to help retain more employees.
Pay for hours worked
As mentioned in our previous blog, employees will have to work some of their hours. However, the minimum number of hours in order to qualify for the scheme has decreased from a third to just 20% of their working hours. This 20% will be paid by the employer, as normal.
Pay for hours not worked
In addition, the employer will have to pay for 5% of time not worked, previously this was 22%. In return, the Government will now pay 62% of the employees’ wages not worked, up to a maximum of £1,541.75. This is double the amount they initially planned to contribute. Whilst we appreciate this is a policy change to help keep people in employment, it is also more attractive to businesses.
Government contribution cap
The Government’s contribution is capped at £1,541.75 a month. This means that employees who earn below £37,500 a year will now get at least 73% of their usual pay. Employers can top this up if they wish, although they will already be paying a 5% top up.
Figures are still being finalised for employees who earn above £37,500. We will pass on these details as soon as the Government releases further information.
How to claim
As before, we will be able to make claims on your behalf from December 2020. The grants will only be available in arrears after employees have been paid their wage and this has been confirmed to HMRC via a real time information payroll submission.
Are you eligible to claim?
Below is the list of further factors which determine how the scheme will operate and who is eligible:
- The employee must have been on the RTI payroll on or before 23 September.
- The employee must work at least a fifth of their normal hours. This time is paid for in full by the employer.
- For the time the employee doesn’t work, the remainder is split in the following ways:
- The first 5% is topped up by the employer
- The government will then top up 62% of the employees’ wages, to a maximum of £1,541.75.
- The employee then loses the remainder of their usual pay.
- Office holders and directors of the company are eligible to claim this Government support.
- Neither the employee or the employer need to have used the previous furlough scheme.
- National Insurance and pensions contributions will not be paid by the scheme and the expectation is that employers cannot top up salaries.
- Employees can work flexibly; potentially rotating on and off the Job Support Scheme.
How the new scheme may impact wages
This table shows how much employers have to pay and how much employees will receive. We have added example figures for an employee who has a gross salary of £2,000 a month.
% of normal hours worked
The employer pays
The Government pays
Total employees will receive
Based on someone earning up to approximately £37,500 per annum.
If your business is forced to close
If your business is forced to close due to Coronavirus restrictions, then the Government will pay 67% of your employees’ wages. It is important to note here that this applies only to businesses that have been told to close, rather than those who choose to close because of a lack of business. We will give more details on this as and when the Government announce them.
£1,000 Job Retention Bonus
Employers will be able to claim for every member of staff who has been furloughed between March and October 2020. However, employees must have been paid at least the minimum income threshold of at least £1,560 from 6 November 2020 through to 5 February 2021. Furthermore, you must pay your employee in each of the tax months:
- 6 November to 5 December
- 6 December to 5 January
- 6 January to 5 February.
The total of these must come to a total taxable pay of over £1,560. This bonus can be claimed between 15 February and the end of March 2021. Applications for the Job Support Scheme will not impact the bonus.
If you have any queries on the new Job Support Scheme or any of the other Government support packages, please let our Payroll team or your Accounts Manager know and we will be happy to assist. You can also read more about us and our services here. You can also email or call us on 0161 370 9600.
This article does not constitute financial advice. This information included in the article was correct to the best of our knowledge at the time of writing and may be subject to change. We recommend contacting our office to discuss your individual circumstances.