Alexis Lane, Business Services Partner at Henley law firm THP Solicitors and sponsors of the Henley Herald, explains how Rishi Sunak has updated his Job Support Scheme (JSS) post-furlough package which launches in November and how it differs from the Job Retention Scheme (JRS).
The difference between the JSS and JRS
The new JSS will replace the JRS from 1 November – commonly known as furlough – which was launched in March to cover 80% of workers’ wages. Under the JRS an employee could either be off work on full furlough, or agree to flexible furlough. There were no restrictions on the split between working and non-working hours under flexible furlough arrangements. However, to qualify under the JSS an employee must work a minimum of 20% of normal working hours (unless JSS: Closed applies which has no minimum hrs).
Employees cannot be made redundant, or put on notice of redundancy, during the period an employer is claiming for them under the JSS. This is a change from the JRS – in terms of which employees could be claimed for even when under notice.
The revised JSS
The original JSS was designed to support the wages of employees who worked at least 33% of their usual hours. Their employers would pay full wages for the hours an employee worked and for the hours a worker was away from their job, the government would pay 33% of their wages, and firms would need to contribute a further 33%.
After the changes to the JSS announced in October, an employee now needs to only work 20% of their usual hours to benefit. The government has also cut the level of employer contribution from 33% to just 5%, up to a cap of £125 per month, with the discretion to pay more than this if they wish. This means the government will pay 61.67% of a worker’s wages for the time they are away from their job, up to a maximum of £1,541.75 per month.
What support is available in Tier 2?
Whilst we hope this won’t be applicable to Henley any time soon, the expansion of the JSS is designed to aid companies suffering a drop in business in areas subject to “high” alert tier 2 restrictions, which include curfews on opening hours and bans on people from different households meeting.
The chancellor also announced cash grants of up to £2,100 per month primarily for businesses in the hospitality, accommodation and leisure sector, which may be adversely impacted by the restrictions in high-alert level areas. The Treasury said the grants would be made available retrospectively for areas that have already been subject to restrictions.
What about Tier 3?
For businesses in “very high” tier 3 alert level areas that have been forced to close their doors, there is a variance of the JSS known as the “Job Support Scheme: Closed”. It requires no contribution to be made to workers’ wages from businesses and does not require an employee to work a minimum number of hours.
Under the JSS: Closed, the government will pay two-thirds (67%) of a worker’s usual wages, to a maximum of £2,083.33 per month. Employers pay no wages, although they have the discretion to top up pay if they wish, and they must still pay national insurance and pensions contributions. The government has also made available business grants of up to £3,000 a month open to companies in tier 3 areas.
The government will introduce parental pay legislation (covering maternity allowance, statutory maternity/, paternity, shared parental, adoption and parental bereavement pay) to avoid parents losing out on their entitlement to parental pay as a result of being put on the JSS during the relevant assessment period. More details on employee eligibility will be available in further guidance published by the end of October.
Employees who can claim for JSS Open and JSS Closed
Eligible employers will be able to claim the JSS grant for employees who were on their PAYE payroll since 23 September 2020. If employees ceased employment after 23 of September 2020 and were subsequently rehired, then employers can claim for them. Employers will be responsible for paying employees as usual for the hours actually worked, and an employee must work at least 20% of their ‘usual’ hours to qualify.
An individual is an employee for the purposes of this scheme if they are treated as an employee for Income Tax purposes. Employees can be on any type of contract, including zero hours or temporary contracts. Agency workers are regarded as employees of an employment agency for the purposes of this scheme, provided they are employees for Income Tax purposes. Employees do not need to have been furloughed under the JRS to be eligible for the JSS.
Job Support Scheme Duration
The JSS will be open from 1 November 2020 and run for 6 months, until 30 April 2021. The government will review the terms of the scheme in January 20201. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved.
The above is a very simplistic look at the JSS scheme and does not take into account all of the issues that may arise and therefore shouldn’t be considered legal advice. Contact Alexis Lane for more information at THP Solicitors for more information to find out how the JSS may affect you or your business.