New Job Support Scheme
I hope you are well and keeping safe during this outbreak.
As you are aware that JRS (furlough scheme) will be finishing from 31 October 2020 which is why the government has announced numerous schemes to avoid mass redundancies.
One of that schemes is Job support scheme (JSS), which is slightly different for a business which is still open and for the businesses which is forced by the government to be closed down.
On this email, we will focus only on the job support scheme for the business which is still open.
The new job support scheme announced by the government for businesses which are open requires the employee to work a minimum of 20% of their usual hours and the employer will continue to pay them as normal for the hours worked. Alongside this, 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.
I understand that this could be confusing which is why we have used a worked example at the bottom of this email. You will also need to ensure that an agreement with an employee is an place which we have also drafted at the bottom of this email.
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.
We have used an example at the bottom of this email.
Eligibility for JSS Scheme:
Employers can only claim for employees that were in their employment on 23 September 2020
Employees must still be working for at least 20% of their usual hours
Employees do not need to have been furloughed under the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme i.e. employees who were not previously furloughed are also eligible for this scheme
To be eligible for the grant, employers must have reached written agreement with their employee
make sure that the agreement is consistent with employment, equality and discrimination laws
keep a written record of the agreement for 5 years
keep records of how many hours employees work and the number of usual hours they are not working
this agreement must be made available to HMRC on request
The Job Support Scheme grant will not cover National Insurance contributions (NICs) or pension contributions. These contributions remain payable by the employer.
Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made.
Employers will be able to claim from 8 December, covering salary for pay periods ending and paid in November.
For employees who are paid a fixed salary, the Reference Salary is the greater of:
the wages payable to the employee in the last pay period ending on or before 23 September 2020
the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the CJRS scheme
Example 1 of UK Government JSS
John normal hours are 30 hours per week or 130 hours per month and is paid £8.75 per hour i.e. £1137.50
- Step 1 – In order for John to be eligible for the scheme, he will need to work for a minimum of 26 hours in a month (20% of 130 hours)
- Step 2 – The company will have to pay 5% of John’s remaining normal hours which is 5.20 hours (130 – 26)
- Step 3 – JSS grant should cover the cost of 61.67% of the total 104 non-working hours (130-26) which will be 64.14 hours
- John’s salary will look like as follows:
- 26 hours worked @ £8.75 = £227.50
- 5.20 hours paid by the company @ £8.75 = £45.50
- 64.14 JSS grant @ £8.75 = £561.22
- Total gross salary payable to John would be £834.23 out of which grant will be claimed of £561.22
Example 2 of UK Government JSS
Doe’s normal hours are 40 hours per week or 174 hours per month and is paid £20 per hour i.e. £3480
- Step 1 – In order for Doe to be eligible for the scheme, she will need to work for a minimum of 35 hours in a month (20% of 174 hours)
- Step 2 – The company will have to pay 5% of Doe’s remaining normal hours which is 7 hours (174 – 35)
- Step 3 – JSS grant should cover the cost of 61.67% of the total 139 non-working hours (174-35) which will be 85.72 hours
- Doe’s salary will look like as follows:
- 35 hours worked @ £20 = £700
- 7 hours paid by the company @ £20 = £140 (maximum is £125)
- 85.72 JSS grant @ £20 = £1714.42 (maximum is £1541.75)
- Total gross salary payable to John would be £2366.75 out of which grant will be claimed of £1541.75
Letter to agree to the Job Support Scheme
Dear [insert name]
As you may be aware, we have been receiving financial assistance from the Government to pay wages via the Coronavirus Job Retention Scheme during the Coronavirus pandemic.
We found it necessary to use the Scheme, and place employees on furlough, because of the challenges we faced because of the pandemic, which were [insert details]. This assistance has been vital in helping the company avoid the need for redundancies during recent months.
The Job Retention Scheme is coming to an end on 31 October 2020 which means we will no longer be able to have employees on furlough. However, the Government has announced a new wage assistance scheme, called the Job Support Scheme (JSS) that will start on 1 November 2020 and is expected to run until 30 April 2021.
[Select from the paragraphs below and delete as appropriate]
As you know, you have been on furlough since [insert date] / As you know, you were placed on furlough between [insert date] and [insert date] and have been working according to your normal hours of work since then / As you know, you were placed on furlough on [insert date], after which we were able to bring you back to work on a part-time basis under the flexible furlough scheme/other. As mentioned above, it is no longer possible to furlough you from 1 November 2020. We continue to face challenges presented by Coronavirus, namely [insert details], so we intend to apply to the JSS in order to receive assistance to pay your wage.
Although you have not previously been furloughed, we have identified a need to apply for wage assistance for your role. This is because [insert reasons]. To access the JSS, it is not a requirement that you have previously been furloughed.
We discussed our current circumstances on [insert date]. [Select from the paragraphs below and delete as appropriate]
During that discussion, you agreed to work the following part-time hours with effect from [insert date]:
[insert details – hours must be at least 20% of normal working hours] [OR]
During our discussion, you agreed to work part-time hours with effect from [insert date]. We agreed that we would notify you of the hours you would be required to work on a week-by-week basis [optional] but anticipate that in most weeks your working hours will adhere to the following pattern:
[insert details – hours must be at 20% of normal working hours] Although your working hours may fluctuate according to demand, you will never be required to work less than 20% of your normal working hours for the duration of our use of the JSS to help cover your wage.
You will receive full pay for the hours that you work. You agreed that, for the remaining hours you would normally have worked, your pay will be reduced out of which 5% on unworked hours will be paid by us and 61.67% of the unworked hours will be paid by the government. The maximum amount that will be paid by us will be the lower of 5% or the £125 while the maximum amount paid by the government will be the lower of 61.67% or £1541.75.
We anticipate that this arrangement will last for [insert details]. We continue to monitor the situation and in the event that the position changes, you will be notified.
I have attached two copies of this letter. Please confirm your agreement to this change in your working hours and pay by signing both copies where indicated below and returning one to me by return.
We are doing everything we possibly can to ensure we are able to survive the challenges we are facing. We appreciate that this is a difficult period for everyone, and I would like to thank you, once again, for your continued loyalty to the business.
[Insert job title]
Let us know if we could be of any further assistance