January 2021 Furlough Scheme update.
The Government has announced that the Coronavirus Job Retention Scheme, aka the Furlough Scheme, will be extended due to a third national lockdown. As a result, the Coronavirus Job Support Scheme will be postponed until April 30th, 2021, the end date of the current Furlough Scheme.
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As a subsequent measure to the Furlough Scheme, the Job Support Scheme aims to help employers retain in-work staff and support the wages of employees effected by reduced working hours, due to Coronavirus.
There Are Two Job Support Types for Businesses
Due to the Coronavirus local measures imposed on businesses and the recent introduction of the ‘Tier System’. The government has divided JSS into two support types – JSS Open and JSS Closed.
What is JSS Open and how does it work?
JSS Open is designed to support businesses who can remain open under COVID restrictions but would still struggle due to a decrease in demand. Under JSS Open employers can apply to keep their employees on shorter hours instead of making them redundant.
With this new scheme, the salary contribution of an employee will be divided between *a minimum of worked hours and not worked hours.
The employer will continue to pay the worked hours, alongside 5% of the not worked hours; up to £125 per month, while the government will cover an additional 61.67% of those hours non-worked; up to £1,541.75 per month.
This will allow employees to retain 66.67% of their normal pay for the hours not worked and therefore the minimum wages they will receive, based on working 20% of their hours is 73% of their overall normal wage, when they earn £3,125 a month or less.
*An employee needs to be in work for at least 20% of the normal working hours.
What is JSS Closed and how does it work?
This Job Support Scheme aims to assist those businesses which were legally required to close due to COVID restrictions in their local areas. Under JSS Closed, two-thirds of the employee’s normal salary will be paid by the employer with it being fully funded by the government, up to £2,083.33 per month.
It’s important to note that for both schemes, NIC and pension contributions will not be covered. These should still be paid by the employer with no financial support from the government
Eligibility criteria for the Job Support Scheme
The below requirements are relevant for both JSS Open and JSS Closed.
It is important to note that an employer can apply for both schemes with different employees.
Employers are eligible for the JSS grant if they:
- Have enrolled for PAYE online.
- Have a UK, Channel Island or Isle of Man bank account.
- Had one or more employees on the employer’s PAYE payroll on 23 September 2020.
- Have permanent employees or employees under a temporary contract, agency workers or zero-hours contracts.
- Have or Haven’t applied for the Furlough Scheme. Meaning, both scenarios do not affect the eligibility status of employers.
JSS Open – employers eligibility criteria
Along with the general eligibility requirements for the Job Support Scheme, the government has introduced some additional conditions for JSS Open:
Employers with more than 250 employees
Businesses with 250 or more employees on 23 September 2020 which have undertaken a Financial Impact Test, showing their turnover has not increased or has been negatively affected by Coronavirus.
Employers with less than 250 employees
Are not required to complete a Financial Impact Test.
Minimum in-work hours
To apply for some or all employees, they must be in-work for at least 20% of their normal hours.
JSS Closed – employers eligibility criteria
Employers would be able to claim only for periods when the business was legally forced to close due to local area COVID-19 restrictions.
How to make a claim?
Applications for the first claim will be made available on Gov.UK’s website from 8th December 2020. The first claim should cover salaries paid during or by the end of November 2020.
Subsequent claims will follow the same procedure until the last claim in April 2021, which will be made in May.
Frequently Asked Questions
Q – The current information provided by the government in regards to the Job Support Scheme seems confusing and incomplete. What should I do?
A – Not much at this time. The government has mentioned that further clarification about the scheme should be made available by the end of October 2020.
Q – What has changed since the first Job Support Scheme announcement made by the Chancellor on 24th September 2020?
A – Originally, employers could join the scheme if employees were considered in-work at least a third of their normal working hours. The employer would pay those in-work hours in addition to a third of the employee’s non-working hours. The government would then contribute another third towards those hours not worked.
Business leaders response to September’s announcement was far from enthusiastic, as they alleged that the increased financial burden for employers in salary contributions compared with the Furlough Scheme; would place businesses in unsustainable circumstances.
This may have led the Chancellor to make some adjustments to the latest support scheme by increasing the amount of subsidised salary for hours not worked.
Q – What is the difference between the Furlough Scheme and the Job Support Scheme?
A – From 1st November, the Job Support Scheme (JSS) will replace the Coronavirus Job Retention Scheme (furlough scheme), in order to allow further support for employers and employees under different COVID-19 restriction measures.
Q – When will the Job Support Scheme start?
A – The scheme will begin from 1st November 2020 and will last for six months, until 30th April 2021.
Q – When will employers be able to submit their first JSS claim?
A – You will be able to make a claim from 8th December 2020 on Gov.UK website.
Q – How many hours should an employee work, in order for an employer to be eligible for the Job Support Scheme?
A – An employee must be in-work for a minimum of 20% of the normal working hours.
Q – Can I apply for a JSS grant if my business was temporarily closed due to local area Coronavirus restrictions?
A – Yes, you should be able to apply through JSS Closed.
Q – What is the amount of salary contributed by the government under the Job Support Scheme for open businesses (JSS Open)?
A – The salary contribution by the government will apply for 61.67% of the hours not worked, up to £1,541.75 per month.
Q – What is the amount of salary contributed by the government under the Job Support Scheme for closed businesses (JSS Closed)?
A – The government will fund two-thirds of the employee’s salary up to £2,083.33 per month.
Q – Can I make a JSS claim for employees who left the business and were later rehired?
A – Yes, as long as they were on the company’s PAYE payroll between 6 April 2019 and 23 September 2020.
Q – Can I apply for the Job Support Scheme if I haven’t made a furlough claim via the Job Retention Scheme?
A – Yes. Whether you have used the furlough scheme or not, it does not affect an employer’s eligibility under the Job Support Scheme.
Q – Does the Job Support Scheme cover National Insurance contributions (NICs) or pension contributions?
A – No, the scheme will not cover NIC and pension contributions. These should still be paid by the employer with no financial support from the government.
Q – Will I be able to make a claim under JSS Closed if my business was affected by a COVID-19 specific outbreak and had to be closed?
A – That depends. If your place of business does not reside in a local area where COVID-19 restrictions have legally prevented it from staying open, then most likely that you wouldn’t be eligible for the JSS Closed grant. However, you might qualify for the JSS Open grant.