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COVID-19
Knowledgebase

Duncan & Toplis is here to help and support you through the ongoing challenges presented by the coronavirus pandemic. Whilst this is an anxious time for many, it’s important to know that there is help available.

We are summarising the measures, including eligibility requirements, as they are announced and all details can be found here in our COVID-19 Knowledgebase.

The Job Support Scheme

COVID-19 Job Support Scheme

The Job Support Scheme (JSS) was announced as a replacement for the Coronavirus Job Retention Scheme (CJRS) and was due to begin on 1 November for a period of six months.

Following the extension to the CJRS announced on 1 November, the JSS has been postponed until the first scheme comes to an end – currently proposed for the end of December 2020.

Unlike the CJRS, the JSS aims to support viable jobs in businesses that are facing lower demand over the winter due to COVID-19.

Varying levels of support will be provided to businesses depending on whether they have had to close due to legal restrictions, ‘JSS Closed’, or if they continue to operate but face decreased demand due to restrictions, ‘JSS Open’.

Under the new JSS Open, employees will be required to work at least 20% of their hours, a reduction from the original announcement of 33%.

For businesses who have been legally required to close their premises as a direct result of coronavirus restrictions, the JSS Closed will help them through the period that they are directly affected by supporting the wage costs of employees who have been instructed to cease work in eligible premises. Under this version of the scheme, each employee who cannot work due to these constraints will receive two thirds of their normal pay, paid by their employer and fully funded by the government, up to a maximum of £2,083.33 per month.

JSS Open

What does the grant cover?

Under the scheme, employees will typically receive at least 73% of their usual pay and the employer will be reimbursed in arrears for the government contribution. 

Employers must pay employees their contracted wages for hours worked, and the government and employer contributions for hours not worked.

Employers will pay 5% of hours not worked, capped at £125 per month, in addition to full National Insurance and automatic enrolment pension contributions. Employers can top up employee’s wages above the 5% contribution at their own discretion. The government will contribute 61.67% of non worked hours, capped at £1,541.75 per month. 

Eligibility

To be eligible, employers must have:

  • enrolled for PAYE online
  • a UK, Channel Island or Isle of Man bank account
  • 250 or more employees on 23 September 2020 and be able to demonstrate that COVID-19 has had an adverse affect on their business by way of a financial impact test – employers with less than 250 employees on this date are not required to satisfy the test
  • reduced the working hours of some, or all, of their employees – to a minimum of 20% of their normal hours

Employees do not have to previously have been on furlough leave to be eligible. 

Employees must be on an employer’s PAYE payroll on or before 23 September 2020. This means a Real Time Information (RTI) submission notifying payment to that employee to HM Revenue & Customs (HMRC) must have been made on or before 23 September 2020.  

Employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-time working arrangement must cover a minimum period of seven days.

What does it mean to be on reduced hours? 

The employee must work at least 20% of their usual hours and for that time worked employees must be paid their normal contracted wage.

For time not worked, the employee will be paid up to 73% of their usual wage.

Employees cannot be made redundant or put on notice of redundancy during the period within which their employer is claiming the grant for that employee.

JSS Closed

What does the grant cover?

Under this version of the scheme, the government will pay two thirds of the employees’ salaries, up to a maximum of £2,083.33 per month. Employers will not be required to contribute towards wages and will only be asked to cover National Insurance and auto enrolment pension contributions, though they may choose top this up at their own discretion.

Eligibility

Employers are eligible to claim JSS Closed if their business premises at one or more locations has been legally required to close as a direct result of coronavirus restrictions – employees must be off work for a minimum of seven consecutive days to qualify.

Employers are only eligible to claim for periods during which the relevant coronavirus restrictions are in place – they will not be able to claim to cover periods after restrictions have lifted and the business premises is legally allowed to reopen. However, they may then be able to claim JSS Open provided they meet that eligibility criteria.

How can I claim?   

The scheme will be open from 1 November 2020 to the end of April 2021 and employers will be able to make a claim online from 8 December 2020. 

Grants will be payable in arrears meaning that a claim can only be submitted in respect of a given pay period, after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.

Calculating regular pay

Regular pay should be made up of any regular payments that the employer is obliged to make, including:

  • regular wages
  • non-discretionary payments for hours worked, including overtime
  • non-discretionary fees
  • non-discretionary commission payments
  • piece rate payments

Employees with fixed pay

For employees who are paid a fixed salary, the reference salary is the greater of:

  • the wages payable to the employee in the last pay period ending on or before 23 September 2020
  • the wages payable to the employee in the last pay period ending on or before 19 March 2020, this may be the same salary calculated under the Coronavirus Job Retention Scheme

Employees with variable pay

For employees whose pay varies, the reference salary is the greater of:

  • the wages earned in the same calendar period in the tax year 2019-2020
  • the average wages payable in the tax year 2019-2020
  • the average wages payable from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

Calculating usual hours

Employees with fixed hours

For employees contracted for a fixed number of hours and whose pay does not vary according to the numbers of hours worked, usual hours are calculated based upon the greater of:

  • the hours that the employee was contracted for at the end of the last full pay period ending on or before 23 September 2020
  • the hours that the employee was contracted for at the end of the last full pay period ending on or before 19 March 2020, this may be the same number of hours calculated under the Coronavirus Job Retention Scheme

Employees with variable hours

The variable hours calculation applies if either:

  • the employee is not contracted to a fixed number of hours
  • the employee’s pay depends on the number of hours they work

For employees whose number of hours varies and/or whose pay depends on the number of hours they work, the number of usual hours is calculated based on the greater of:

  • the number of hours working in the same calendar period in the tax year 2019-2020
  • the average number of hours worked in the tax year 2019-2020
  • the average number of hours worked from 1 February 2020 (or the employee’s start date if later) until 23 September 2020

This should include hours paid as annual and statutory leave.

What do I pay if an employee is on a short time working arrangement and then goes on statutory leave? 

Where an employee is on a short time working arrangement, and then takes statutory leave such as maternity, adoption or parental leave, their statutory pay will be calculated on their usual earnings, rather than their reduced earnings. 

How do arrange this with an employee? 

There will be some employers who have a short-time working clause in their contracts of employment, they can in principle reduce their employees’ hours, advising them that they are short-time working. In these cases, the employer would not need the employee’s permission. Our HR team can support you by checking your contractual wording and by providing letter templates. 

Many employers will not have a short-time clause in their contract – in these cases, they cannot simply tell the employee that their hours and pay are reducing, they must seek the employee’s permission first. Failing to do this would be a breach of contract and would create a legal risk to the employer. 

We would expect most employees to accept this request as the alternative in most cases would be redundancy. If the employee agrees to reduced hours you must confirm this in writing and keep a record for a minimum of five years, it’s vital you maintain an audit trail of this process.

We can provide a template letter for your use, please contact your usual Duncan & Toplis adviser or submit a request here.

What happens if an employee doesn’t agree to a period of short time working? 

Remember that the reason your employee is being asked to reduce their hours is because there is a reduced amount of work for them to do. If the employee does not agree to short time working, the alternatives could potentially be redundancy. 

In order to reduce an employees hours, the employer needs to rely upon a contractual right to do so which is expressly written into the contract of employment. Without this clause, the employer must consult with the employee and seek agreement. As above this is almost certainly going to be agreed, but redundancy could be a fall back position – in which case, you would still need to follow the normal legal process. 

Can we choose to reduce the hours of whoever we want to?

Caution is needed here. Employers must first decide what roles need to be reduced in line with reduced workloads.

If you have a short-time working clause in your contract you can then reduce the hours of the employees. If you don’t, you need to seek their agreement setting out the options i.e. redundancy, no pay or reduced hours and then get this in writing from the employee. 

You cannot just pick and choose whose hours will reduce where people are doing the same job. For example, if you have five employees doing the same job, but only need three in work, you cannot just choose the two to be reduced (as the same employment law applies regarding discrimination and equality). Instead, one option could be to ask for volunteers first and consider scoring that affected group of employees against a fair criterion, in order to select fairly. 

Seeking employee agreement for JSS Open

A request by the employer to work reduced hours or to change their start and finish times would be considered as a temporary change to the employee’s terms and conditions of employment and would not be covered by any current or previous furlough agreement that you may have had with the employee.

As such, where an employer wishes to bring an employee back to work but on different hours, this change of terms and conditions must be discussed with the employee, they must agree to the temporary change and it must be confirmed in writing. This temporary change must be confirmed in writing to the employee and records must be retained for a period of five years.

This written confirmation should include: 

  • confirmation that any period of furlough is ending and that the employee will be returning to work on a part time/changed hours basis
  • statement of the employee’s contractual hours and what their new temporary hours and/or start and finish times are 
  • start date of the new arrangement 
  • anticipated end date of the new arrangement 

We can provide a template letter for your use, please contact your usual Duncan & Toplis adviser or submit a request here.

Employers may wish to consider how best to utilise different start and finish times of your employees in your business to minimise the number of employees in work at any one time. 

The employer must also consider how they are going to maintain social distancing and appropriate risk assessments must be undertaken to ensure that the workplace is safe before allowing employees back to work.

Seeking employee agreement for JSS Closed

In order to be eligible for the grant, employers must seek written agreement from their employees to cease working for a minimum of seven consecutive days. A copy of this agreement should be retained for a minimum of five years.

We can provide a template letter for your use, please contact your usual Duncan & Toplis adviser or submit a request here.

 

The information provided herein is intended for general information only. If you require any advice or support in relation to the Job Support Scheme and managing your employees, please contact our team.

 

Payroll, COVID-19, Human Resources


Duncan & Toplis

Duncan & Toplis was established in 1925 and has 11 offices throughout the East Midlands: in Boston, Grantham, Lincoln, Loughborough, Louth, Melton Mowbray, Newark, Skegness, Sleaford, Spalding and Stamford. The group offers accountancy, tax and business advice, audit and assurance services, HR, Payroll, wealth management, IT services, legal and probate services and provides business turnaround support to SMEs. The business has 413 employees, of whom 65 are currently engaged in professional training.

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