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There is life for businesses after CJRS; but it’s complicated

28th October 2020

The new Job Support Scheme (JSS), which comes into effect from 1 November 2020, is designed to protect viable jobs in businesses experiencing a drop in trade due to COVID-19.  It is intended to run for six months and is both less generous and more complex than the Coronavirus Job Retention Scheme (CJRS).

Employees who cannot go back to work full time will be paid two thirds of their wages for the hours that they cannot work, provided they are able to work for at least one third of their normal hours.

The employer will have to pay their wages for any hours worked, as well as any pension and National Insurance contributions, whilst the employer and the government will each pay one third of the employees’ normal wage for the hours they are unable to work.

The amount paid by the government will be calculated on the basis of the employee’s normal wage, not the amount they might have received whilst on furlough, with the amount capped at a maximum of £697.92 per month.

A business can make use of the JSS and the Jobs Retention Bonus simultaneously to protect jobs, and the employer does not need to have furloughed its employees and used the CJRS.  Larger businesses will have to undergo a financial assessment test to assess the claimed drop in turnover caused by COVID-19.

The definition of a ‘larger business’ is not included in the fact sheet published by the government, but the definition of an SME in the UK, requires two of the following:

  • Turnover of less than £25m;
  • Fewer than 250 employees; and/or
  • Total gross assets worth less than £12.5m

These larger businesses will also be under an ‘expectation’, and rules are likely to follow, that they will refrain from making capital distributions, like share buybacks or dividend payments while using the grant.  Within this framework of regulations, any employer with a UK bank account and UK PAYE schemes can access the JSS.

To receive the grant, an employee will have to have been on the PAYE payroll on or before 23 September 2020 and for the first 3 months the employee will have to work at least one third of their usual hours – the government will review this figure after 3 months.

The scheme offers a degree of flexibility, allowing employees to shift on and off as circumstances dictate, whilst not having to work the same each month, although each set of working hours must cover a minimum period of at least 7 days.

New scheme changes even before launch

The political and economic landscape currently changes so quickly, that it should come as no surprise that the scheme is different to first intended, having expanded to make allowances for the emergence of the second COVID-19 wave of infections.

As well as covering viable jobs (as defined by the 33% rule, detailed above), the JSS will also cover any furloughed jobs within those businesses, which it is envisaged are required to close by government restrictions such as those introduced in Tier 3 regions (i.e. pubs and restaurants).

Employers will make their claims in arrears, with the first being made from December.  Under this expanded version, the employee has to be not working at all, rather than working for 33% of their normal hours, and will have to have been on the payroll on or before 23 September 2020, as well as having been furloughed for a minimum of 7 consecutive days.

As with the standard JSS, employees will receive two thirds of their wage for any hours not worked, but unlike the standard JSS, in these circumstances the two thirds will be paid exclusively by the government, with the employer not having to contribute.

There is a cap on this two thirds government contribution of £2,100 per month.  Although employers under this expansion of the scheme will not have to pay the basic wage, they will still have to pay National Insurance and pension contributions.

It should be noted that:

  1. Employees cannot be made redundant or receive notice of redundancy for any period claimed.
  2. The grants are presently only for reimbursement of wages paid and so those wages cannot be deferred until receipt of grant monies.
  3. The employer, as with the Furlough and CJRS, has to agree the arrangement with the employee, make any relevant changes to the employment contract and inform the employee in writing.

Additional Measures

In addition to the new JSS, the government also announced additional measures:

  • The temporary 15% VAT cut for businesses in the tourism and hospitality sectors will be extended until the end of March 2021
  • Businesses which previously deferred payment of VAT will be given the option of paying back in 11 smaller interest free instalments during 2021-22
  • The length of time for repaying Bounce Back loans will be extended from 6 years to 10, and the same will apply to the Coronavirus Business Interruption Loan Scheme

This will be a complicated scheme to administer and mistakes can happen, some of which will have serious consequences, so get it right with legal advice from an experienced employment law team.

Contact Jason Alcock who works with businesses to resolve a wide variety of employment law problems on 01543 267456 or email jalcock@ansonssolicitors.com

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