The financial workings of the new scheme were clearly set out by the Chancellor yesterday: from 1 November 2020 until 30 April 2021, where an employee works at least one-third of their normal working hours, the government will pay up to one-third of their pay for the non-worked hours, capped at £697.92 per month, if the employer also pays for one-third of the non-worked hours. There is no cap on the employer contribution. We expect that the guidance will set out a “normal hours” calculation similar to that used in the current Job Retention Scheme (“JRS”).
Other notable features of the JSS are as follows:
- Employees can be placed on the scheme whether or not they were furloughed under the JRS, provided that they were included in an RTI payroll submission by the employer on or before 23 September 2020.
- It is automatically open to any small or medium employer with a UK payroll, whether or not they participated in the JRS.
- Large employers will only qualify if they meet a financial test – yet to be published – that evidences a drop in turnover as a result of the pandemic.
- If the normal Companies Act definition of a large company is adopted, this would apply to companies that meet two of the following criteria:
- turnover of more than £36 million;
- balance sheet total of more than £18 million;
- more than 250 employees.
How this applies to groups of companies may be clarified in the guidance.
- Employers will not be permitted to give employees notice of redundancy or to make them redundant if they are on the JSS – this is perhaps responding to one of the common criticisms of the JRS.
- The government factsheet states that: “our intention is that employees will be informed by HMRC directly of full details of the claim”. This appears to be for the purposes of fraud-prevention.
- Large companies will be “expected” not to pay dividends or make other capital distributions while accessing the JSS, although the extent to which this will be a legally binding obligation is unclear.