The Winter Economy Plan – what does it mean for employers?.

Chancellor Rishi Sunak last week unveiled his ‘Winter Economy Plan’ (Plan) in response to the resurgence of COVID-19. The objective of the Plan is to “minimise the harm from COVID-19 to people’s health and wellbeing, while preserving the ability of people to work and businesses to trade”.

It is clear that the new interventions which were announced by Prime Minister Boris Johnson last Tuesday and the fact that the Coronavirus Jobs Retention Scheme (CJRS) is due to come to an end in October will have a significant adverse impact on businesses throughout the winter period. The Plan introduces what the government calls a package of targeted measures to allow businesses to protect jobs and manage their finances in the face of continued uncertainty.

Further details are expected shortly but the government has provided the following guidance so far on the new Job Support Scheme (JSS), which will replace CJRS:

What is JSS?

  • JSS will run for six months from 1 November 2020 and demonstrates a shift in focus to helping those businesses who can support employees doing some work but who need more time for demand to recover.

Which employers can use the scheme?

  • JSS will be available to all employers with a UK bank account and a UK PAYE scheme.
  • Large businesses will be required to meet a financial assessment test that demonstrates that their turnover is now lower than it was due to the effects of COVID-19.
  • Small and Medium-Sized Enterprises will not be required to meet a financial assessment test.
  • JSS is not dependent on whether the employer or the employee have previously utilised CJRS.

What restrictions will apply to employers who utilise JSS?

  • The government expects that Large businesses will not make capital distributions (such as dividend payments or share buybacks) while using JSS. Further details are to follow.

Which employees are eligible for JSS?

  • To be eligible, employees must:
    • be on an employer’s PAYE Payroll on or before 23 September 2020;
    • for the first 3 months of the scheme, work a minimum of 33% of their usual hours and after 3 months the government will consider whether to increase this; and
    • not be on a redundancy notice.
  • We expect the government to clarify whether JSS can also be used in respect of ‘workers’ as was the case under CJRS.

What does the JSS grant cover?

  • Employers must pay employees their normal contracted wages for hours worked.
  • For every hour not worked by the employee, the government and the employer will each pay one third of the employee’s ‘usual pay’. The government’s contribution will be capped at £697.92 a month.
  • Assuming an employee works only 33% of their usual hours:
    • the government will pay 22% (subject to the cap), which compares to 60% under CJRS;
    • the employer will pay 55%; and
    • the employee will receive 77% (gross and subject to the cap), of the employee’s usual wage. 
  • The grant will not cover Class 1 employer NICs or pension contributions, although these contributions will remain payable by the employer.
  • ‘Usual pay’ calculations are expected to follow a similar methodology as for the CJRS. Full details are to follow.

What are the working arrangements under JSS?

  • 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.
  • It is expected that employers will be unable to top-up their employees’ wages above the two-thirds contribution to hours not worked at their own expense.  This had been possible under CJRS.
  • Employees cannot be made redundant or put on notice of redundancy whilst the employer is claiming under JSS for that employee.  This is a key difference to CJRS and reflects the push from the government to protect ‘viable’ jobs.

How can employers claim?

  • Employers will make a claim online through Gov.uk from December 2020.
  • The government will reimburse the employer in arrears on a monthly basis.  
  • Employers must agree the new short-time working arrangements with their staff, make any changes to the employment contract by agreement and notify the employee in writing.

The following schemes which were introduced as part of the Chancellor’s ‘Plan for Jobs’ on 8 July 2020 will begin to take effect:

Jobs Retention Bonus (JRB)

  • JRB is a one-off payment to employers of £1,000 for every eligible employee.

Which employers are eligible?

  • All employers are eligible for JRB (including recruitment agencies and umbrella companies) provided they have:
    • complied with PAYE and RTI reporting obligations for all employees;
    • maintained enrolment for PAYE online; and 
    • hold a UK bank account.

Who are eligible employees?

  • Eligible employees are employees who:
    • were furloughed and had a valid CJRS claim submitted by the employer;
    • remain continuously employed through to 31 January 2021;
    • earned an average of £520 per month between 1 November 2020 and 31 January 2021;
    • have up to date Real Time Information (RTI) records to the end of January 2021; and
    • are not serving a notice period that started before 1 February 2021.

How can employers claim?

  • From February 2021, employers will be able to claim JRB through GOV.UK. Further details are to follow.
  • Employers should ensure that their payroll information and RTI records are up to date and that any requests by HMRC for missing information have been complied with.

Kickstart Scheme

  • The Kickstart Scheme provides funding for employers to create 6-month job placements for 16 – 24 year olds who are currently on Universal Credit and at risk of long-term unemployment.

The contents of this article are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this article. © Mundays LLP.

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