UPDATE: An announcement on 5 November confirmed that CJRS is to be extended to March 2021 with both the Job Support Scheme and Job Retention Bonus being put on hold. Accordingly some of the detail in this article is now out of date. For more information see Furlough to be extended to March 2021, Job Support Scheme and Job Retention Bonus on hold.
When it was introduced the Job Support Scheme was heavily criticised because of the significant financial contribution required of employers. To be eligible for the scheme employees had to work at least 33% of their normal hours and the employer's contribution to "unworked hours" was also 33%. This created a scenario where employers could end up paying employees 55% of their salary when they were only working 33% of their hours. For many employers that made no financial sense.
On 22 October the Chancellor announced significant changes to the scheme, which will now be known as the "JSS Open". The change of name is to differentiate it from the JSS terms applicable to businesses that are required to close under lockdown regulations - that part of the scheme will now be referred to as "JSS Closed". More information on JSS Closed is available here.
JSS Open now only requires employees to work 20% of their normal hours - so an employee who normally works full time only has to be working the equivalent of 1 day a week. Employers will be required to pay only 5% of hours not worked up to a cap of £125 per month with the Government contribution to unworked hours increasing to 61.67% up to a cap of £1,541.75. This is a significant uplift to the previously announced cap of £697.92 and means employees will still receive two thirds of their pay (subject to the cap) for unworked hours. The caps are based on a monthly reference salary of £3,125.
Employers will remain responsible for Class 1 NICs and auto enrolment pension contributions.
Employers are now also able to top up wages beyond the amounts provided for in the JSS Open scheme if they wish to do so. The originally announced version indicated that the Government expected employers would not top up.
Otherwise the scheme remains the same as previously announced with all small and medium sized employers with a UK bank account and UK PAYE schemes eligible. Larger businesses (250 or more employees) will be required to demonstrate that their business has been adversely affected by COVID-19. The Government also expects that large employers will not be making capital distributions (such as dividends), while using the scheme albeit that would not make them ineligible for it. Employees who were on the employer's PAYE payroll on or before 23 September 2020 can be claimed for (so an RTI submission must have been made on or before that date).
The requirement for employers to agree the new short-time working arrangements with their employee, agree changes to the contract and notify the employee in writing also remains. As with the furlough scheme, HMRC will check claims, with payments being withheld or clawed back if a claim is found to be fraudulent or based on incorrect information. The short time working agreement between employer and employee must be made available to HMRC on request.
The employee is to be reimbursed monthly in arrears by the UK Government contribution and employees must not be under notice of redundancy. Employers will be able to make a claim online through gov.uk from 8 December 2020. This means 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.
The scheme will run for six months from 1 November. Employers can claim under the JSS and also under the Job Retention Bonus scheme.
Further information on the announcement is available here. In addition, a Job Support Open Factsheet produced by the Government is available here and an HMRC policy paper is available here. Further Treasury Guidance is due to be published shortly.