Job Support Scheme – no longer a chocolate teapot
The old Job Support Scheme (which was basically hopeless) has been replaced with something much more useful to employers who are here for the long-term but are facing reduced demand and therfore require less labour.
The main source of information is the HMRC Policy Paper but in the final week of October more detail and sample calculations will roll out.
The headlines are:
- The employee will need to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked
- The employee will receive 66.67% of their normal pay for the hours not worked – this will be made up of contributions from the employer and from the government
- The employer will pay 5% of reference salary for the hours not worked, up to a maximum of £125 per month, with the discretion to pay more than this if they wish
- The government will pay the remainder of 61.67%, of reference salary for the hours not worked, up to a maximum of £1,541.75 per month
- This will ensure employees continue to receive at least 73% of their normal wages, where they earn £3,125 a month or less.
The Job Support Scheme (JSS) is open to most employers and most employees, and an employee does not need to have been previously furloughed in order to be included in the new scheme.
The first JSS claims may be made by employers from December 8. Claims may only be made once employees have been paid for the claim period.
HMRC will be inspecting for fraudulent claims and intend to publish the names of employers who have used the scheme. The public can report fraud to HMRC if they have evidence to suggest an employer is abusing the scheme.
Make sure you read the small-print before considering a claim!
And make sure the relevant changes to employees’ contracts of employment have been agreed in writing.
Job Support Scheme calculations
The employee must be paid for at lest 20% of their normal contracted hours in order to qualify for the JSS.
Let’s assume she earns £18,000 p.a. so her normal monthly gross pay is £1,500 and she agrees to work one day per week i.e. 20% of normal hours. She is therefore paid £1,500 x 20% = £300 for the hours worked.
This leaves £1,200 unpaid.
- The employer pays 5% of the unpaid portion – £60
- The Government pays 61.67% of the unpaid portion – £740.04
- £399.96 is unpaid (but the employer can top up if they wish)
Our employee is paid £300+£60+£740.04 = £1,100.04. This is 73% of their full gross pay and MUST be paid through the payroll.
The cost to the employer is £300+£60 = £360 plus employer’s NI and workplace pension contributions on £1,100.04.
A more detailed example from HMRC is here. More examples will follow from HMRC in the last week of October.
In summary, this version of the Job Support Scheme is a much better scheme. And it’s felxible too – temporary working agreements can be put in place with employees for periods as short as seven days.
Employers need to start thinking about how they can use the JSS and agree new arrangements in writing with employees from November 1.
And make sure you read the small-print!