The new Job support Scheme (JSS) which was recently announced by the Chancellor was updated yesterday to reduce the costs for employers. The JSS is due to start on 1st November 2020 and run for 6 months. The main changes announced yesterday are that:
- the employer contribution to the wage cost of unworked hours is reduced to 5%, and
- the minimum number of hours the employee will have to work is reduced to 20%, rather than 33%, so those working just one day a week will now be eligible.
The Government will pay 61.67% of the hours not worked up to a cap of £1,541.75 per month, the employer will contribute 5% of non-worked hours up to a maximum of £125 per month. This will ensure that employees will earn a minimum of 73% of their usual pay.
The eligibility for the scheme remains the same as previously announced, with additional tests for large employers of 250 or more employees. Employees will be able to go in and out of the scheme, but the arrangement must cover a minimum 7-day period. The grant will not cover Pension or Employers National Insurance.
The claim system is expected to be similar to the one for the Corona Job Retention Scheme already in operation and will open on 8th December 2020. The claim will be paid monthly in arrears after the payment has been reported via an RTI return to HMRC.
HMRC have published some useful examples:
– Average worker on furlough –
• Andrew normally works 5 days a week and earns £1,400 a month, working in a restaurant in the hospitality sector. His company is suffering reduced sales due to coronavirus. Rather than making Andrew redundant, the company puts Andrew on the Job Support Scheme, working 20% of his usual hours.
• His employer pays Andrew £280 a month for these hours.
• And for the time he is not working (80%), he will get 66.67% of his pay for that time. His total wage package is 73%, equal to £1,027.
• The Government will give a grant worth £691 (61.67% of hours not worked) to Andrew’s employer to support them in keeping Andrew’s job, and his employer will pay a further £56 for hours not worked (5% of wages).
• In addition, the employer will cover the Employer NICs and auto enrolment pension contribution on the payment (£56).
• His employer may also be eligible for the Job Retention Bonus worth £1,000, which would cover 94.6% of the employer’s total costs for retaining Andrew on the JSS between November and January.
• Any household, with no children or disabilities, that is entitled to UC will see an increase in their entitlement if their earnings fall, equal to 63p per £1 of earnings lost.
– Average worker in hospitality on furlough –
• Elena normally works part-time and earns £1,100 a month. Her company is suffering reduced sales due to coronavirus. Rather than making Elena redundant,
• The company puts Elena on the Job Support Scheme, working 20% of her usual hours. Her employer pays Elena £220 a month for these hours.
• And for the time she is not working (80%), she will get 66.67% of her pay for that time. Her total wage package is 73%, equal to £807.
• The Government will give a grant worth £543 (61.67% of hours not worked) to Elena’s employer to support them in keeping Elena’ job, and her employer will pay a further £44 for hours not worked (5% of wages).
• In addition, the employer will cover the Employer NICs and auto enrolment pension contribution on the payment (£19).
• Her employer may also be eligible for the Job Retention Bonus worth £1,000, this would cover over 100% of the employer’s total costs for retaining Elena on the JSS between November and January.
• Any household, with no children or disabilities, that is entitled to UC will see an increase in their entitlement if their earnings fall, equal to 63p per £1 of earnings lost.
Self Employed Income Support Scheme (SEISS)
Rishi Sunak has announced the third SEISS grant will now be based on 40% of average trading profits (it was previously announced at 20%) for businesses temporarily unable to trade due to Coronavirus. In order to claim the third and fourth grant you must have been eligible to claim for the first two even if no claim was made. You must declare that you intend to continue to trade and either:
- are currently actively trading but are impacted by reduced demand due to coronavirus, or
- were previously trading but are temporarily unable to do so due to coronavirus.
Details of the fourth grant have not yet been released, but we will of course keep you up to date when new announcements are made.
Wheelers update
The office is currently open 9.00am – 4.00pm to clients to drop off records with most of the Wheelers team working from home again due to the updated guidance issued. We are not holding client meetings in the office at the moment, but we are making alternative arrangements if required. We hope you are all managing to stay safe and well in these strange times.