The end of furlough but what is the Job Support Scheme?
The government furlough scheme ends on 31st October 2020. We’ve all pretty much understood it – eventually. Now the Job Support Scheme will take over and it’s not that clear, especially the numbers part!
The Job Support Scheme (JSS) starts on 1st November 2020 and runs for 6 months – until 30 April 2020. It will top up salaries where employees can not be taken back full time. Employees must be in a ‘viable job’ and work at least 1/3 of the normal hours.
Viable jobs are those for which there is a current need, and which are not being propped up by the furlough scheme, where someone can work one third of their normal hours. For example, a bar person in a partially opened restaurant would be viable, but a theatre usher where the theatre is currently closed would not.
The basics of the JSS are that the employee works at last 1/3 of their normal hours, the employer meets that cost and pays 1/3 of the remaining hours not worked. The government pays 1/3 of the unworked hours and the employee will forfeit the remaining 1/3. The employee will receive a minimum of 77% of their normal salary, a working example can be seen below.
The numbers part explained
Let’s take a hypothetical employee (Sam) with some nice round numbers to illustrate how the JSS would work:
Sam’s usual working hours per week would be 35 hours. A minimum of 1/3 needs to be worked to claim the JSS grant.
Sam will now work 20 hours per week, leaving 15 hours not worked to complete his contractual hours.
Sam is paid £10 per hour, with the total weekly pay usually being £350
Sam is paid by the employer for 20 hours worked (20 x £10) totalling £200
The 15 hours not worked is split 3 ways (5 hours x 3)
|5 hours paid by employer||£50|
|5 hours paid by the JSS grant||£50|
|5 hours forfeited by Sam||£50|
|Total received by Sam||£300|
Sam is receiving 85.7% of his normal pay (£300 ÷ £350) – so well over the minimum 77% that the government says has to be met to qualify for the JSS grant.
The employer meets the cost of hours actually worked plus 1/3 of the costs for the hours not worked.
Simple right ???
It’s not and takes a lot of getting your head round, especially when the numbers are not lovely and round like the above example.
Eligibility – the employer
- There is no financial assessment for SMEs
- Large businesses will need to meet a financial assessment test
Eligibility – the employee
- The employee does not need to have been furloughed
- They must be on the pay roll on or before 23 September 2020
- For the first 3 months of the JSS, they must work at least 1/3 of their usual contracted hours
- The government grant proportion is paid to the employer in arrears and capped at £697.92 per employee, per payment period. It will not cover NICs or pension payments
- Employees cannot be made redundant during the period the grant is being claimed
- HMRC will check claims and employees will be informed directly by HMRC
- Employers will need to agree new, short term working agreements with the employee. A written agreement will be needed to change contractual terms and conditions
- Guidance is expected on how to calculate “usual wages”
- Employers using the JSS are also able to claim the Job Retention Bonus (that’s the £1000 for keeping staff after furlough but there is eligibility criteria)
For the full government factsheet click here
PSHR are on hand to help you steer through this transitional period, providing advice and support.