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28/10/2020

Job Support Scheme (JSS) explained

The JSS will apply from when the furlough scheme ends until 30 April 2021 (as at 02.11.20). The JSS provides two separate levels of support: first, to employers facing lower demand over the winter months due to the COVID-19 pandemic (JSS Open) and second, to those employers that are legally required to close their premises as a direct result of local or national COVID-19 restrictions (JSS Closed).

Key features of JSS Open

This part of the scheme has the following key features:

  • Employees must work (and be paid by their employer for) a minimum of 20% of their "usual" hours (this was 33% under the rules as originally announced on 24 September 2020).
  • The government will pay up to 61.67% of an employee's normal wages for hours not worked (previously 22% under the rules as originally announced). The level of the government grant will be capped at £1541.75 a month (this was originally set at £697.92).
  • The employer must contribute 5% of pay towards unworked hours (previously 22% under the rules as originally announced), capped at £125 per month. Employers may voluntarily top up this contribution.
  • The caps are based on a monthly reference salary of £3,125.00. This ensures that employees earn a minimum of at least 73% of their total normal wages, where these do not exceed the reference salary.
  • The employee will not be paid for the remaining one third of unworked hours, meaning that employees will receive up to 66.67% (two-thirds) of their wages for unworked hours.
  • The grant will not cover Class 1 employer national insurance contributions (NICs) or pension contributions, which will remain payable by the employer in respect of both the government and employer payments for unworked hours (and pay for hours actually worked).
  • To be eligible, employees must have been on their employer's PAYE payroll between 6 April 2019 and 23 September 2020. An RTI full payment submission notifying payment in respect of an employee must have been made to HMRC at some point between 6 April 2019 and 23 September 2020. There is no requirement that they were previously furloughed under the CJRS.
  • Employees will be able to "cycle on and off the scheme" and will not have to work the same pattern each month, but each short-time working arrangement must cover at least seven consecutive days.
  • Employees cannot be made redundant or given notice of redundancy during the period for which their employer is claiming the grant for them.
  • All small and medium-sized businesses, regardless of sector, can participate in the JSS (with the exception of fully publicly funded bodies). Larger businesses with 250 or more employees will only be eligible to make claims under JSS Open if their turnover has fallen during the COVID-19 pandemic and the government expects that they will not be making capital distributions (such as dividends) while using the JSS.
  • The JSS Open is available to employers throughout the UK with a UK bank account and a UK PAYE scheme registered before 23 September 2020, regardless of whether they have used the CJRS.
  • Employers who retain previously furloughed staff on shorter hours will be able to claim under both the JSS Open and the Job Retention Bonus (JRB) scheme.
  • The government grant can only be used as reimbursement for wage costs actually incurred, so employers cannot defer payment to employees until they have received payment from the government.

What is short-time working?

The reference to short-time working for the purposes of the JSS Open does not have the same precise meaning and financial implications as statutory short-time working under section 147 of the Employment Rights Act 1996. In the context of the JSS, short-time working is intended to mean reduced hours compared with an employee's contractual or usual working hours.

Do employees have to work the same work pattern every month?

Employees do not have to work the same pattern each month. However, each short-time working arrangement must cover a minimum period of seven consecutive days.

Must employees work at least 20% of their usual hours in every seven-day period?

The 20% minimum hours requirement is a key component of the JSS Open. However, some businesses may not be able to guarantee at least 20% of an employee's working hours every week. Guidance is awaited on whether this minimum requirement must be satisfied in respect of every seven-day period or whether usual hours can be averaged out over a longer period of, say, a month.

What will happen if an employee is unable to work 20% of their usual hours?

It is not clear whether any exceptions to the requirement for employees to work a minimum of 20% of their usual hours will be made under the JSS Open where the employee is prevented from working. This may be the case where the employee is extremely vulnerable and is advised to shield and cannot work from home, or is required under legislation to quarantine.

What is the position where an employee undertakes training?

The position differs depending on whether the training is undertaken during unworked or worked hours.
Employees can undertake training during worked hours and a claim be made in respect of them under the JSS Open. The time spent training must be paid for by the employer at the employee's full rate of pay. The time will then count towards the 20% minimum working hours requirement.

An employee can also undertake training voluntarily during unworked hours. Where training takes place during unworked hours and attracts a minimum wage entitlement in excess of the JSS grant payment, employers will need to pay the additional wages.

Does sickness absence or annual leave count towards the minimum hours requirement?

Pending further guidance, the position regarding sickness absence and annual leave remains unclear.

Key features of JSS Closed

This part of the scheme has the following key features:

  • Employers who are legally required to close their premises and cease operations for at least seven consecutive (or calendar) days may claim under JSS Closed. This includes premises that are restricted to delivery or collection only services and those restricted to the provision of food and drink outside.
  • Large employers with 250 or more employees can access this part of the scheme without a financial impact test, but there is an expectation that they will not make capital distributions.
  • The government will pay two-thirds of eligible employees' normal pay up to £2,083.33 per month.
  • Employers will not be required to contribute to employees' pay, but they will be required to cover employer Class 1 NICs and auto-enrolment pension contributions.
  • Employers can voluntarily "top up" the government's contribution.
  • Employees must have been on their employer's PAYE payroll on or before 23 September 2020. There is no requirement that they were previously furloughed under the CJRS.
  • An employee cannot be made redundant or put on notice of redundancy during the period in respect of which their employer is making a claim.
  • In order to claim, employers must have a UK bank account and a UK PAYE scheme registered on or before 23 September 2020.
  • Claims must not overlap and must be made monthly in arrears.

Can an employer make claims under both the JSS Open and JSS Closed?

Employers may need to access both parts of the JSS for different parts of their business (for example, premises may be legally closed in one region that is subject to Tier 3 restrictions whereas premises in another region may not be legally closed, but still be subject to a downturn in work due to being in a Tier 2 restriction or in a sector adversely affected by the COVID-19 pandemic). An employer can claim the JSS Open and JSS Closed grant at the same time for different employees. However, an employer cannot claim for a single employee under both schemes at the same time.

An employer does not need to have used the CJRS in order to apply for a grant under either part of the JSS.

Can employers defer payment or claim in advance under the JSS?

Under both parts of the JSS, it will not be possible for employers to defer payment to employees until reimbursement is received from HMRC (this was initially possible under the CJRS). Nor can employers claim in advance of their payroll run, as previously permitted under the CJRS. The grant in respect of both parts of the JSS will be payable to the employer in arrears as reimbursement for the government's contribution.

Can an employer voluntarily top up pay for non-worked hours?

This was originally unclear in relation to the JSS Open as a result of ambiguous wording in the initial fact sheet. However, the government has now confirmed that employers can voluntarily top up employees' wages under both the JSS Open and the JSS Closed.

Can an employee work for another employer during the hours they are not working under the JSS?

It is not yet clear whether an employee will be able to work for another employer when they are not working for the employer that is making a claim in respect of their wages under the JSS. In principle, it seems likely that an employee may be able to do this if they are not in breach of the contractual obligations they owe to their employer.

What happens if an employee considers it is not safe for them to return to the workplace?

The 20% working hours requirement is a key component of the JSS Open. Consequently, this requirement will not be capable of being met if an employee cannot work from home but is unwilling to return to their workplace (assuming it is able to open) following the end of a period of full furlough.

If an employee remains unwilling to return to their workplace, despite the workplace being COVID-secure and the completion of an appropriate risk assessment, one option may be to agree a period of unpaid leave with the employee.

Will it be an unfair dismissal if an employer makes someone redundant rather than placing them on the JSS?

It is difficult to determine whether an employment tribunal would find such a dismissal to be unfair at this stage. In accordance with the test for reasonableness under section 98(4) of the ERA 1996, it will depend on the particular circumstances of the case, including the size and resources of the employer.

Where a redundancy situation under section 139(1) of the ERA 1996 exists, the option for employers to access the JSS will not necessarily mean that an employee's dismissal will be unfair. In the current climate, some jobs have genuinely ceased to exist and workplaces have closed. The fact that there may be a possibility that an employer may need an employee in a similar role at some point in the future does not mean that an employer must put an employee on the JSS. However, employers should be able to show that they have considered the JSS as an alternative to redundancy for each type of role they consider to be redundant. They should also document their reasons as to why use of the JSS would not be suitable in the particular circumstances.

Can an employee request that their employer places them on the JSS?

Yes, an employee can request this. However, an employer does not have to agree to the employee's request. It is the employer's decision which employees to place on the JSS, whether to use the JSS scheme at all, and for how long. There are costs consequences for the employer in participating in both parts of the JSS (these are more significant in respect of the JSS Open). Depending on the circumstances, an employer may want to weigh up potential redundancy costs against the costs of using the JSS. If the employee was previously furloughed, there is the incentive of the JRB if the employee is employed until 31 January 2021 (although continued employment need not be under the JSS).

Can an employer rotate access to the JSS between its employees?

Employees will be able to "cycle on and off" the JSS Open provided that each short-time working arrangement is at least seven consecutive days.

This raises the question of what employees should be paid during periods when they are not participating in the JSS. Employers will need to agree these arrangements with employees (for example, if they are not to be paid for hours not worked when they have "cycled off" the JSS Open) and make any consequential changes to their contracts of employment.

It is not yet clear what the position is regarding rotation of employees in relation to the JSS Closed.

Will employers need to collectively consult if they intend to put 20 or more employees on the JSS?

The same legal considerations will apply in relation to collective consultation about changes to employees' employment contracts to reduce their pay as applied in relation to implementing pay reductions in connection with the CJRS.

Alternatives to using the JSS

Can an employer reduce working hours without using the JSS Open?

Both parts of the JSS are less generous than the original CJRS. Consequently, cash flow may be an issue for employers given that the government subsidy operates monthly in arrears.

Where an employer has some work (but not enough to guarantee 20% of usual hours), it is possible that it may seek to agree reduced working hours arrangements with employees rather than accessing the JSS Open. The fact that the JSS and JRB are completely separate schemes may also be a disincentive for employers to join the JSS Open. This is because employers can simply agree reduced hours with employees without accessing the JSS and still qualify for the JRB, if the relevant conditions are met.

Agreements to reduce pay outside of the JSS would still need employees' written consent and may also trigger collective consultation requirements, depending on the numbers involved.

Where a business is legally required to close as a direct result of COVID-19 restrictions, employers will need to weigh up whether they can afford to pay Class 1 employer NICs and pension contributions under JSS Closed against the costs associated with redundancies.

What other options are there?

If an employer considers that jobs may be viable in the long-term but not the short-term, other options include:

  • Lay-off, if it has the contractual right to take this approach.
  • Unpaid leave.

If employers cannot afford to use the JSS and the other options suggested above are not possible, then they may need to consider redundancies.

Not joining the JSS will not necessarily make a redundancy unfair given the costs associated with the scheme (and the minimum working hours requirement for the JSS Open).

Can an employee on the JSS be served with notice and what notice and redundancy pay are they entitled to?

It is not possible to claim the JSS grant in a period during which an employee is made redundant or served with notice of redundancy.

Employees who have participated in the JSS will be on reduced pay. The government introduced the Employment Rights Act 1996 (Coronavirus, Calculation of a Week's Pay) Regulations 2020 (SI 2020/814) with effect from 31 July 2020 to ensure that a week's pay for employees furloughed under the CJRS for the purposes of a number of statutory rights, including statutory notice pay and statutory redundancy pay, be based on their pre-furlough contractual pay rather than their reduced furlough pay.

While there has been no confirmation of this yet, similar regulations in relation to the calculation of such statutory payments for employees on the JSS, (so that their notice pay and redundancy pay is also based on their normal pay), are expected.

How should employers approach redundancy pooling where some employees participate in the JSS and others do not?

We consider it unlikely that the fact that some employees are participating in the JSS should affect the employer's identification of redundancy selection pools.

In deciding whether a redundancy selection was fair, a tribunal must decide whether the employer's choice of pool was within the range of reasonable responses. The usual approach is to consider the type of work which is ceasing or diminishing and which employees perform that kind of work. If the employer confined its selection pool to those employees participating in the JSS, this may be regarded as unfair because the selection process for putting employees on the JSS may not have been as rigorous as required where dismissal is being considered.

Annual leave and the JSS

Guidance is awaited on the relationship between annual leave and the JSS. However, the position is likely to be similar to full furlough and flexible furlough under the CJRS.

COVID-19: JSS Open agreement for short-time working

If you are seeking to implement a short-time working arrangement under the COVID-19 Job Support Scheme which will apply from 1 November 2020 to 30 April 2021, you will need a written agreement with an employee.

If you require a copy of an agreement, please email Irina Polyakova irinapolyakova@eatonsmith.co.uk