Goodbye CJRS, Hello JSS, Maybe JRB
As we approach the end of the operation of the flexible furlough scheme (FFS) under the extended coronavirus job retention scheme (CJRS), we now need to get to grips with the job support scheme (JSS) which starts on 1 November 2020.
Before it had even come into operation, the Chancellor extended the scope of the JSS last Friday in advance of the Prime Minister’s announcement this Monday that a new local alert system would be set up for England. We all saw and never wish to repeat the adverse economic effects of the nationwide lockdown earlier this year. The three tiers of local lockdown will start with the current 10pm bar/restaurant curfew and rule of six (medium), rising to measures including prohibiting social mixing indoors, together with closing bars and pubs in areas of very high COVID-19 transmission (very high).
The JSS is part of the Chancellor’s Winter Economy Plan and will take over when the CJRS ends, running for six months until 30 April 2021. It will focus on those businesses adversely affected by COVID-19. Larger businesses will only be able to take advantage of the JSS where their turnover can be shown to have decreased as a result of COVID-19 and they will not be expected to declare dividends for shareholders during this time. Smaller and medium-sized businesses (to be defined, but possibly those with fewer than 250 employees) will not have to show such an adverse financial impact.
Unlike the FFS, employers will be able to claim for employees irrespective of whether they have been previously furloughed, provided that they were on the employer’s payroll before 23 September 2020 and not under notice of redundancy (or made redundant). For the first three months of the scheme, employees must work at least 33% of their “usual hours” (pre-furlough if relevant) for which they must be paid by their employer. The Government will decide in due course what rule should apply for the second three months of the scheme.
The employer must also pay the employee for a third of those hours not worked, together with a further sum for which it may claim a grant in arrears (starting in December 2020) from the JSS. These two-thirds must be paid at the employee’s “usual rate of pay” (probably to be calculated in the same way as under the CJRS), subject to the Government grant being capped at £697.92 a month. The employee will not receive any pay for the remaining third of their normal pay. Therefore, for an employee who is only provided with work for 33% of their normal working hours, they will receive 33% plus 22% plus a further (capped) 22% totalling up to 77% of their normal pay. The grant will not cover employer NICs or auto-enrolment pension contributions which will remain payable by the employer. The employer will only be able to claim monthly in respect of seven-day-long periods under which the employee works short hours, although the employee’s working hours may vary from week to week.
Where a business is forced to close its premises (or is limited to delivery and collection services) due to local or national lockdown restrictions, an employer will also be able to claim under an extension to the JSS where an employee is off work for at least seven consecutive days because of the closure. In this case, the employer may claim a grant from the Government for two-thirds of eligible employees’ normal pay (up to £2,100 per month) and will not have to make any contribution to the employee’s wages. The ordinary rules relating to the JSS will still apply in respect of payment of the grant being in arrears, the employee not being under notice of redundancy (or made redundant) during the relevant period and the employer paying both employer NICs and auto-enrolment pension contributions. However, the employer will be able to “top up” the payments if they wish.
As with the CJRS, the employer will have to agree any reduced hours and reduced pay arrangement with the employee, setting it out in writing. Hopefully, employees will agree to the changed terms if they see that the alternative is likely to be lay-off or redundancy. Employers should also consider whether it is necessary to enter into collective consultation with employee representatives before putting a JSS in place.
There are many details of the JSS which are yet to be clarified, such as whether employees on leave of any kind can be included, whether workers are covered, whether the employer can top-up an employee’s wages ordinarily and the effect of any TUPE transfer. As with the CJRS, we should expect the Government to publish detailed guidance and a Treasury Direction in due course.
On 8 July 2020, the Government had announced a Job Retention Bonus (JRB) of £1,000 which could be claimed between 15 February 2021 and 31 March 2021 for all eligible employees. Such employees will have been furloughed at some time under the CJRS, will have remained continuously employed until 31 January 2021, will have earned an average of at least £520 per month between 1 November 2020 and 31 January 2021 (in respect of whom Real Time Information records are up to date as at 5 February 2021) and not be serving any notice period that commenced before 1 February 2021. The JSS and JRB are two completely separate schemes, but reduced wages earned during the period of any claim under the JSS may affect eligibility for the JRB. The JRB may be kept by the employer and doesn’t need to be paid over to the employee.
As always, please contact one of the team at Synchrony Law for advice and guidance on any employment issue.