The government has set out further eligibility criteria and conditions for making claims under the Job Support Scheme (JSS).
The Chancellor announced the JSS on 9 October 2020 to specifically target support to businesses across the UK that are legally mandated to close when tighter COVID-19 restrictions are introduced in their local areas. You can read our original commentary here.
Businesses forced to closed under tighter restrictions
Since the Chancellor’s announcement, increasing numbers of areas have been placed within the Very High local COVID alert level. In such areas, all pubs and bars must close unless they operate as a restaurant, serving substantial meals. The government may also mandate the closure of further businesses in areas with a Very High local COVID alert level, such as entertainment and tourist attractions, leisure centres and gyms, libraries and community centres, close contact services, and performing arts venues. It is clear that a large number of employers will be impacted.
Job Support Scheme: open and closed
In a policy paper published on 22 October 2020, the government has set out further details about the JSS. The paper distinguishes between the “Job Support Scheme Open” (JSS Open), which applies to employers that can operate their business safely but continue to face reduced demand, and the “Job Support Scheme Closed” (JSS Closed), which applies to employers who are legally required to close their premises as a direct result of coronavirus restrictions set by one or more of the four governments of the UK. You can read our analysis of the JSS Open here.
Support available under JSS Closed
Each eligible employee who cannot work due to the closure of their workplace 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. The employer has discretion to “top up” the employee’s wages if they wish.
The JSS grant will not cover employer National Insurance contributions (NICs), which the employer must pay to HMRC, calculated on the full amount that is paid to the employee (including any amount subsequently covered by the JSS grant). Employers will also need to pay pension contributions in accordance with the applicable pension scheme terms, unless the employee has opted out or stopped paying into their pension.
In comparison with the support available in the last month of the Coronavirus Job Retention Scheme (CJRS), which closes on 31 October 2020, the cost to employers is less onerous under the JSS Closed. Under the CJRS in October 2020, an employee is entitled to receive 80% of their normal pay (up to a cap of £2,500 per month) and their employer is required to pay 20% of those wages, in addition to pension contributions and employer NICs. Under the JSS Closed, however, the same employee would be entitled to receive 66.67% of their normal pay (up to £2,083.33 per month), while their employer would only be required to pay pension contributions and employer NICs (calculated on the lower amount of 66.67% of pay).
The JSS Closed
Which employers are eligible?
To be eligible to claim a JSS Closed grant, an employer must be legally required to close their business premises at one or more locations as a direct result of coronavirus restrictions set by one of the governments of the UK. This includes premises restricted to delivery or collection only services from their premises and those restricted to provision of food and/ or drink outdoors. Businesses whose premises are required to close by local public health authorities as a result of specific workplace outbreaks are not eligible under the JSS Closed.
Employers are only eligible to claim for periods during which they are legally required to close their premises. If the employer is unable to re-open for any reason after restrictions are lifted, the employer will cease to be eligible to claim under the JSS Closed, but may be able to claim under the JSS Open if the relevant eligibility criteria are met.
The employer does not need to have submitted a claim under the CJRS to be eligible to claim under the JSS Closed.
An employer may submit claims under both the JSS Closed and JSS Open at the same time, although not in respect of the same employee. This may apply to employers with premises in different locations, where not all of their premises are legally required to close. Additionally, employers whose premises are legally required to close may still need some employees to conduct at least the minimum 20% of work required to claim under the JSS Open (such as a restaurant manager with ongoing administrative responsibilities).
The government “expects” that large employers (with 250 or more employees), and their corporate groups, will not make capital distributions (including dividends and equivalent payments under a partnership) while claiming a JSS grant. The obligation on employers is moral, rather than having legal force. However, given that HMRC intend to publish the names of employers who have used the JSS, many employers will be deterred by the reputational risk of being perceived to use tax payers’ money to augment the profits of a successful business.
Which employees are eligible?
Employers can claim for employees who were employed by them on 23 September 2020. Employers may still claim in respect of employees whom they dismissed after 23 September but have subsequently re-hired.
To be eligible for their employer to claim a grant under the JSS Closed, the employee’s primary place of work must be at the premises which are legally required to close. Where an employee works at one or more premises, including the closed premises, the employer will not be able to claim in respect of that employee under the JSS Closed unless the closed premises is their primary place of work. The employer may instead be able to claim in respect of that employee under the JSS Open, depending on the circumstances.
The policy paper confirms that employers, “cannot claim for an employee who has been made redundant or is serving a contractual or statutory notice period during the claim period.” It is unclear whether an employer who has already served notice on an employee would be permitted to revoke that notice and then claim in respect of that employee under the JSS Closed.
The policy paper states that employers, “must have reached written agreement with their employee (or reached written collective agreement with a trade union where the relevant terms are determined by collective agreement) that they have been instructed to and agree to stop working for a minimum of seven consecutive calendar days. The agreement must be available for view by HMRC on request.”
An employer may, however, receive little notice of the requirement for their premises to close, which is likely to present practical difficulties in reaching a written agreement with employees in advance of the closure. We await further guidance to ascertain whether such agreement can be reached retrospectively or, as was the case with regard to the CJRS, a verbal agreement with the employee can simply be documented in writing afterwards.
Further guidance expected
The government is due to release further guidance on eligibility conditions for the JSS Closed grant before the end of October 2020. The government has also committed to reviewing the JSS in January 2021, so we may see further changes implemented after that time.