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Covid-19 wages support schemes – November 2020 update

Possibly one of the biggest challenges that we have been dealing with over the last eight months as an accountancy firm is keeping up with all the multiple forms of financial support available to our clients, so that we can give the right advice at the right time. This is evidenced today by the fact that the landscape changed even after I wrote the article first thing this morning!

As we move into a second period of lockdown today, there is once again a lot of noise about the job protection schemes available and it would be easy to get lost in the confusion – the furlough scheme has been extended, but what about the Job Support Scheme that was supposed to start – and what do we mean by JSS Open and JSS Closed?

This article hopefully pulls together where we are on these schemes now to clear up any confusion.

Coronavirus Job Retention Scheme (CJRS)

This scheme was due to end on 31 October but has now been extended until the end of March.

For the time being, the scheme will pay 80% of wages for furloughed staff for the hours they do not work, up to a cap of £2,500 per month. The employer will still need to pay all the Employer National Insurance (NIC) and pension contributions. As before the employer can choose to “top up” the wages to the 100% level but are not required to do so.

The existing rules around “flexible furlough” continue to apply, so employees can be asked to work reduced hours and the furlough scheme will cover 80% of the wages for the balance of their normal working hours.

Eligible employees are those already on the payroll – i.e. the employer must have made a PAYE submission to HMRC between 20 March and 30 October 2020 notifying a payment of earnings for that employee.

Also, as before, if employees were on the payroll on 23 September but have stopped working or have been made redundant, they can qualify if they are re-employed.

The support levels will be reviewed in January, if measures are easing at that stage we can expect to see the level of support tapering for the final three months of the scheme.

Job Support Scheme (JSS)

This new scheme was due to start from 1 November but has been postponed such that there will not be an overlap with the CJRS. Given that the furlough scheme will now run until the end of March, it therefore appears likely this scheme will not be effective until April 2021. The following information is based on the scheme as currently drafted.

Because of the way events have unfolded with regional restrictions and “tiers” in place, this has now been split into two distinct schemes.

Large employers (250 or more employees) are eligible for this scheme only if they can show they are experiencing reduced business activity due to coronavirus.

JSS Open will apply to businesses which are still operating but have been impacted by Covid-19. The scheme operates in a similar way to flexible furloughing, and makes a grant available to cover 61.67% if an employee’s wages for hours not worked, up to a total grant cap of £1,541.75 per month. The employer will also have to contribute 5% of the cost of hours not worked up to £125 per month.

As with the CJRS, the employer will still need to cover the NIC and pension costs.

be eligible for JSS Open, employees must still be working at least 20% of their usual hours, and have been placed on a JSS Open temporary working agreement covering at least 7 consecutive days.

JSS Closed will apply to businesses that are legally required to close because of coronavirus – principally this will be businesses in the hospitality sector that may not be allowed to open after lockdown has ended.

The grant payment will cover 66.67% of an employee’s wages up to a total cap of £2,083.44 per month. Again, the employer is still liable to pay the NIC and pension costs, and like JSS Open, the employee must have been placed on (and agree to) a JSS Closed temporary working agreement for at least 7 consecutive days.

The JSS schemes apply to the whole of the UK, so eligibility will depend on the local restrictions put in place by the devolved administrations for businesses outside of England.

In summary

There are other conditions that businesses need to consider in terms of eligibility so please do ask your accountant or your usual Randall & Payne contact for more information if you need it. This is a summary of the key features of the employment support schemes available now, but as ever, things can change very quickly depending on the path of the pandemic.

We offer free advice clinics for you to discuss any of your concerns, so if you would like to book a slot to speak to one of our experts by phone or video call, please call 01242 776000 or email clinics@randall-payne.co.uk.

Click here for more Covid related articles.

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