Change is more than just “an R” to “an S” with the new JSS

Hallowe’en.  Trick or Treat.  Guy Fawkes Night.  

Apple tarts, dunking coins, sparklers and fireworks. 

*IMPORTANT UPDATE: 1 NOVEMBER 2020* 
The Job Retention Scheme has been extended for a further month;  Job Support Scheme postponed until JRS ends. Further details to follow shortly. 

In our house, for the small and the not so small kids, the mid-term break always signalled the advent of Christmas.   Soon the November diaries would fill up, then the party nights would kick off, and from a business side of things, the new year’s budgeting process would get under way in earnest.

How 2020 is different… we’ll still have the apple tarts and I’d say there’ll be the odd firework lighting up the skies tomorrow evening; but the world of hospitality and business has been turned on its head.  

And budget-setting, well that’s a whole different ball game.

As we move into month 9 of living with Covid-19, we all desperately await the arrival of a successful vaccine and the end of this truly horrible disease.

For employers, 1 November 2020 marks yet another new dawn.  It’s goodbye furlough and hello Job Support Scheme.  

For those of us of an age who can remember the 80’s TV game show Chain Letters, changing one letter to make a new word sometimes was fun; but for employers changing “an R” to “an S” in JRS and moving to JSS, there are no star prizes to be had…   

For many it’s a case of hanging in until the world of business returns to somewhere near norm.

As the new Job Support Scheme comes into play this weekend, our top 10 points give employers and employees the insight they need as we move from one scheme to another:

       1. The existing Job Retention Scheme (or furlough) ends on Saturday.

2. There are two versions of the new Job Support Scheme (JSS) which opens on Sunday – JSS Open and JSS Closed.

3. Taking the latter first, JSS Closed applies to businesses legally forced to close under government regulations – hotels, bars, restaurants, hairdressers, barbers, beauticians and so on. If your business was forced to close, then you can claim 66.67% (or two thirds) of your employee’s wages under the JSS.  You don’t have to top up employee wages beyond 66.67%.

4. If your business is still open, or if you have closed of your own choice and don’t fall within the list of businesses forced to closed, you will come within the JSS Open category (even if your doors may be closed).

To be eligible for support under the JSS Open scheme, your employee must work at least 20% of their normal hours.

You pay the employee for the hours worked.  

Government will then support you by helping with the cost of paying your employee in part for the hours not worked; the employer will pay 5% of hours not worked, Government will fund 61.67% of hours not worked, so that employees receive up to 66.67% (or two thirds) of their normal wage for hours not worked (note the Government contribution is capped at £1,541.67 per month or weekly equivalent).  

That means employees will receive full pay for hours worked and two thirds’ pay for hours not worked (up to the Government max. cap for hours not worked).

But very important – if they work no hours, there will be no support.

5. Large employers with 250 or more staff on their books will have to demonstrate a negative financial impact of Covid-19 on their income before making their first claim.  For small and medium sized employers (SMEs) there will be no such test.

6. Similarly, large companies paying shareholders dividends will be excluded from the scheme.  Again, this does not apply to SMEs.

7. The new JSS will run for 6 months until 30 April 2021.  Claims can only be made in arrears and the first claim can be made on or after 8 December.  So unlike furlough, you will not be able to have the claim in the bank before paying your staff.  You must have paid your staff before you claim.

8. The new JSS will not cover employer national insurance or pension contributions.  Employers must pay these costs and should have these liabilities paid before making a JSS claim.

9. If your pay period straddles the end of the JRS and the start of the JSS, you will need to make two separate claims – one under each scheme.

10. Guidance on how to calculate support for variable working hours is due to be issued before the end of the month.

One thing’s for sure, this scheme is nowhere near as valuable to employers and employees as its predecessor.  Cash is king and employers need to carefully forecast to make sure there is money in the bank to cover wages, employer contributions, overheads – and to pay yourself too.

There’s no doubt it’s a very tough time for all businesses.  But do try to get some downtime. Maybe it’s time for another slice of home-made apple tart after all!  Take care and keep safe.

Gerard Gildernew
30 October 2020

For further information on the new Job Support Scheme, contact Gildernew & Co. at info@gildernewandco.com or by telephone on 028 8772 4697. Read more of our Blog Insights here. 

Gildernew & Co. Ltd make every effort to ensure the accuracy of the information herein.   However, no reliance should be placed on any of the above without seeking independent professional accountancy, legal and/or financial advice.