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How can I pay my staff after Furlough ends?

Furlough also known as the Job Retention Scheme will end on 31st October 2020. After this date, the available support for paying staff is the Job Support Scheme.    

The Job Support Scheme (JSS) will open on 1st November 2020 and run for 6 months. JSS is split into 2 parts, JSS Open where the business can stay open or JSS Closed where the business has a legal requirement to close due to lockdown rules.

What is the Job Support Scheme (Open)?

The Job Support Scheme for businesses that are open, is assistance given to the employer to help pay staff after Furlough ends but staff hours are reduced. Of hours not worked by Employees the government will fund 61.67% of hours not worked per employee, up to a maximum of £1547.75 per employee, per month. 

The aim is to help keep employees in employment, while employers need more time to recover from the economic disruption because of Covid 19. Employers can use JSS even if Furlough was not used. The scheme starts on 1st November 2020.

What are the main differences between Furlough and the Job Support Scheme Open?

JSS Open will not be providing funding for employees who are doing no work. The Job Support Scheme can only be used for employees who are in viable jobs. A viable job is a job that will continue but currently due to Covid 19, the employee in this job is facing reduced hours. 

At first it was announced the Employers would not be able to top up employees’ wages but later HMRC released a notice saying “Employers have the discretion to pay more if they wish”.

Employees on JSS Open will get at least 73% of their salary.

Which employers can apply for JSS (Open)?


  • All small and medium size employers will be eligible if they have employees that fit the criteria, and the turnover of the employer has decreased due to difficulties due to Covid 19.
  • Larger employers (those with 250 or more employees) will need to show that they have suffered financial loss because of Covid 19 by completing a Financial Impact tests
  • While using the JSS scheme employers will be expected to pay out no dividends to the shareholders, as the point of claiming JSS is the employer is saying “I do not have enough money or work to keep my employees in work for their contracted hours”.
  • All employers must have a UK bank account and a UK PAYE system.

Which employees can be placed in JSS Open?

  • The employee must have been on the employers PAYE payroll between 6th April 2020 to  23rd September 2020.
  • An RTI (Real Time Information) showing payment to this employee must have been submitted to HMRC on or before 23rd September 2020
  • Employers can only claim JSS for employees who were in their employment on 23rd September 2020.
  • If an employee left their employment after 23rd September 2020 but then were rehired, employers can still claim for these employees.
  • There is a minimum level of hours criteria, this states any employee placed in JSS Open must work at least 20% of their normal hours.
  • There must be no work for 7 or more days.
  • Any reduced hours must be agreed with the employee in writing, so for each change in hours there must be a separate written agreement, signed by employee and employer.  HMRC might ask to see the written agreement.
  • Any employee on JSS cannot be given notice of redundancy or be made redundant during any period the employer is claiming JSS for that employee.
  • Employers need to pay employees the hours they work, plus 5% of hours not worked.  The 5% of not worked hours is to a maximum of £125 per month.

How much support will an employer get from the government for JSS?

The employer will need to pay the employee the number of hours they have worked, (this will be a minimum of 20% of normal contractual hours).

Of the hours not worked:
  • The employer must pay 5% of the hours not worked.
  • The government will provide funding for 61.67% of the hours not worked, up to a maximum of £1547.47 per month per employee 
  • The employee will not be paid for 33.33% of the hours not worked.
Example:

Beth works 5 days a week and earns £500 per week. Her hours are being cut to 1 day per week (20% of normal working week) so she will receive £100 per week from her employer for hours worked.

Of the remaining £400 per week for the 4 days per week Beth is not working:
  • The employer will pay £20 per week being 5% of lost salary
  • The government will fund £246.68 per week being 61.67% of lost salary 
  • Beth will lose £133.32 per week of her hours not worked (33.33% of hours not worked

How do employers apply for JSS funding?

Employers will need to pay the JSS to employees in the first instance. An employer can only claim for JSS support after an RTI has been submitted for the employee and wages paid to the employee. The online application for JSS funding will open from 8th December 2020, (further guidance yet to be released).   Reimbursement of the JSS will be made on a monthly basis.

Example:
In the example above Beths employer will pay her weekly or monthly for November, including hours worked, and 66.67% of hours not worked being the 5% from employer and the 61.67% that the government will fund.

In December the employer will make a claim for £246.68 per week that was paid to Beth in advance of receiving the JSS support.

Can employees be moved in and out of JSS Open?

Employees can be placed in and out of the scheme. Actual worked hours can vary but each working arrangement must last for at least 7 days. Every change in worked hours must have a written agreement.

What support is available if a business is placed in Tier 3 and are legally told to close?

In cases where the business has to temporarily close because the location has been placed in lockdown (tier 3), so there is no work, employers can apply for JSS Closed. JSS Closed means the Government will pay 2/3rds of the employees salary, 67% of the salary, up to a maximum of £2083.33 per month, for all viable jobs.

The Employer will not need to pay anything under the JSS Closed scheme.

JSS Closed is only relevant if the business is legally required to close due to lock down rules. If a business has to close due to a workplace outbreak of Covid 19, they are not eligible for the JSS Closed scheme. JSS Closed is only available for jobs where the employee will return to work once restrictions are lifted because the employee works in a viable job and not a position that is facing or due to face redundancy.

What are my next steps?

1. Check how many staff will suffer lost hours from November.

2. Make sure of the above staff, each job is viable.        

3. Make sure all reduced hours are agreed with staff and written agreements done and   signed by Employee and Employer.        

4. Make sure you have the funding to cover the wage as you will be paying your staff before JSS is reimbursed to you.

Need additional help with calculating the hours/cost/JSS or just need some guidance. Get in touch, we are here to help.



 

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