Financial Support Available to Employers - October 2020

The Coronavirus Job Retention Scheme (Furlough) has been extended until 31 March 2021. The introduction of the Job Support Scheme and the Job Retention Bonus have been postponed indefinitely. Please see Extended Coronavirus Job Retention Scheme for further details. Eligible employees can continue to have their wages subsidised. Key dates and details of the available schemes are below.

Job Support Scheme

On 24 September 2020 the Government announced a Job Support Scheme (JSS) intended to incentivise shorter hours working and reduce the need for employers to make redundancies. The JSS has been adapted on a number of occasions to respond to an evolving situation. The JSS will come into effect on 1 November 2020 and will run for a period of six months, with a review in January 2021. The JSS will 'top up' employee wages where their working hours have been reduced due to lower demand.

How can I claim?

Grants under the JSS will be paid in arrears. An employer can only submit a claim for the grant after the wages have been paid to the employee. The first payments under the JSS will be made in December 2020. SMEs across all sectors will be eligible to apply for grants under the JSS. However, large businesses will need to demonstrate a reduction in turnover due to the impact of Coronavirus. Neither the employer nor the employee needs to have previously accessed the Coronavirus Job Retention Scheme.

How will the JSS work?

To be eligible for support under the JSS the employee must:

• have been on the employer's payroll on or before 23 September 2020;
• work at least 20% of their usual hours; and
• have agreed, in writing, a reduced hours working arrangement with their employer.

The employer will pay the employee, as normal, for the hours worked. Wages for the unworked hours will be paid as follows:

• the employer will contribute 5%;
• the Government will contribute 61.67% (up to a maximum of £1,541.75 per month); and
• the employee will need to agree a wage reduction in respect of a third of their unworked hours.

Under the JSS, the employer cannot 'top up' wages for the unworked hours. The employer will need to pay national insurance and pension contributions as normal, but it's not yet clear on what proportion of the employee's wages. Employees will be able to move in and out of the JSS provided that each reduced hours working arrangement covers a minimum period of 7 days. Employees cannot be made redundant or be put on notice of redundancy while their employer is claiming a grant under the JSS. Further guidance on the JSS is awaited. In the meantime, the Government factsheet provides some additional detail.

Expanded Job Support Scheme for workplace closure

On 9 October 2020 the Government announced that it will expand the Job Support Scheme (JSS) to those businesses legally required close due to local or national lockdowns. This expansion will include businesses restricted to providing delivery and collection services only, however, will not include business required to close by public health authorities due to a Coronavirus outbreak. The expanded JSS will come into effect on 1 November 2020 and will run for a period of six months, with a review in January 2021. HMRC will publish the names of companies who claim under the expanded JSS so that their employees can check if their employers have passed on the JSS grant received.

How can I claim?

Grants under the expanded JSS will be paid in arrears. An employer can only submit a claim for reimbursement after wages have been paid to the employee. The first payments under the expanded JSS will be made in December 2020.

How will the expanded JSS work?

To be eligible for support under the expanded JSS the employee must:

• have been on the employer's payroll on or before 23 September 2020;
• be unable to work due to workplace closure for at least 7 consecutive days; and
• have agreed the new scheme in writing with their employer.

Once employees have agreed the new scheme, employees will receive two-thirds of their wages for time not worked subject to a monthly limit of £2,100. Employers will need to pay this amount and account for tax, employer national insurance and pension contributions. Employers can choose to top up an employee wages for the time not worked but there is no requirement to do so. Employees cannot be made redundant or be put on notice of redundancy during the period in which their employer is claiming a grant under the expanded JSS. When businesses are permitted to reopen, employers can access the JSS if they face reduced demand and meet the criteria for the JSS set out on 24 September 2020. Further detail on the expanded JSS is awaited. In the meantime, the Government Factsheet provides some additional detail.

Job Retention Bonus

The Job Retention Bonus (JRB) is intended to support business who keep employees in employment from November to January 2021. There are minimum income thresholds to prevent claims for those on zero-hour contracts who have not been working.

How much can I claim?

Employers will be able to claim a £1,000 for each eligible employee. An eligible employee must:

• have previously been on full or partial furlough;
• remain continuously employed from 1 November 2020 to 31 January 2021;
• not be under notice of termination;
• meet the minimum taxable income threshold (£1,560 over the months of 6 November 2020 to 5 February 2021); and
• be paid at least one payment of taxable earnings in each relevant tax month. The relevant tax months are 6 Nov 2020 to 5 Dec 2020, 6 Dec 2020 to 5 Jan 2021 and 6 Jan 2021 to 5 Feb 2021.

Employers can also claim £1,000 for each agency worker or office holder satisfying the above criteria.

How can I claim?

Employers will need to submit a claim in respect of each eligible employee. This will be a huge task for large employers. The guidance states that claims for the JRB can be carried out on behalf of employers, by agents authorised to complete PAYE online.

What can employers do now? 

The window to claim JRB will be open for just over six weeks; employers need to be ready to claim. The HMRC guidance reminds employers to:

• remain enrolled for PAYE online;
• comply with PAYE obligations to file PAYE accurately and on time under Real Time Information (RTI) reporting for all employees between 6 April 2020 and 5 February 2021;
• keep payroll up to date and report leaving dates before the end of the pay period that employees leave in;
• use the irregular payment pattern indicator in RTI for employees not being paid regularly; and
• comply with all requests from HMRC to provide employee data for past Coronavirus Job Retention Scheme claims.

Further guidance on the JRB is awaited. In the meantime, the Government guidance provides some additional detail and worked examples.

Job Retention Bonus: FAQs 

1. Can I claim the JRB if an employee is on reduced pay due to family, statutory or sick leave during the relevant tax months? Yes, provided they meet the minimum taxable income threshold, and are paid one payment of taxable earnings in a relevant tax month. This will be especially relevant for self-isolating employees receiving SSP.
2. What if our pay periods do not coincide with the relevant tax months? The payment of taxable earnings in a relevant tax month applies irrespective of your business' pay period (monthly, weekly or otherwise).
3. Can I claim the JRB if an employee resigns between November 2020 and January 2021? No. Employees will not be eligible if they are under notice of termination during these months. It does not matter whether the employer has given notice or whether the employee has resigned.
4.  What if an employee has transferred under TUPE? Employers cannot claim the JRB in respect of employees who transfer to their employment under TUPE after the Coronavirus Job Retention Scheme closes on 31 October 2020. An employer can claim the JRB for employees who transferred to its employment before that date, provided the other eligibility criteria are met.
5. Can I claim the JRB if I use the Job Support Scheme or the expanded Job Support Scheme to support employee wages between November 2020 and January 2021? Yes. An eligible employee's salary may be supported during the relevant months by the Job Support Scheme. It's not yet clear how this will work for employees who have not previously been furloughed. Guidance on this is awaited.
6. Are there circumstances in which I cannot claim JRB for an employee? You cannot claim for any employee in respect of whom you have paid back the Coronavirus Job Retention Scheme grant, even if the reason you paid back the grant was a genuine error.[ela_accordion]

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If you would like to talk through the consequences for your business, please email us and one of our team will get in touch.