JSS update: Government to pay a larger share of workers’ wages

Chancellor Rishi Sunak has expanded the Job Support Scheme (JSS), announcing that the government will pay a larger share of employees’ wages than initially planned.

He revealed that there will also be more money for people who are self-employed and grants for businesses in areas that are affected by local lockdowns.

The JSS will replace the furlough programme at the start of November and is separately defined by the government as follows:

‘JSS Open’ – for employers facing decreased demand

‘JSS Closed’ – for Employers who are legally required to close their premises. This scheme remains unchanged (https://wnj.co.uk/job-support-scheme-2/).

When originally announced, JSS Open saw employers paying a third of their employees’ wages for hours not worked and required employees to be working 33 per cent of their normal hours.

This latest announcement reduces the employer contribution to those unworked hours to just five per cent.

It also drops the minimum hours requirements to 20 per cent, so those working just one day a week will be eligible.

The government has also increased the amount of profits covered by the two forthcoming self-employed grants from 20 per cent to 40 per cent, which means the maximum grant will increase from £1,875 to £3,750.

It says this is a potential further £3.1bn of support to the self-employed through November to January, with a further grant to follow covering February to April.

The chancellor also announced additional funding to support cash grants of up to £2,100 per month – primarily for businesses in the hospitality, accommodation and leisure sector who may be adversely impacted by the restrictions in high-alert level areas.

These grants will be available retrospectively (backdated to August 1, 2020) for areas that have already been subject to restrictions, and come on top of higher levels of additional business support for Local Authorities moving into Tier 3.

The government says the grants could benefit around 150,000 businesses in England, including hotels, restaurants, B&Bs and many more who aren’t legally required to close but have been adversely affected by local restrictions.

HOW IT WORKS

JSS Open

Under the JSS Open, for each hour not worked, the employee will be paid up to two-thirds of their usual salary.

The government will provide up to 61.67 per cent of wages for hours not worked, up to £1,541.75 per month.

Using the government’s illustrative example, for an employee whose unworked hours total £881 in the month:

One third of these unworked hours remain unpaid to the employee.

The government contributes £543 (£881 x 61.67%) under the JSS Open scheme and their pays employer £44 (£881 x 5%).

Employers using the scheme will also be able to claim the Job Retention Bonus (JRB) for each employee that meets the eligibility criteria. This is worth £1,000 per employee (https://wnj.co.uk/job-retention-bonus/).

Taking JSS Open and JRB together, an employer could receive more than 95 per cent of the total wage costs of their employees if they are retained until February.

Self-employed

The government will provide two taxable SEISS grants to support those who are experiencing reduced demand due to Covid-19 but are continuing to trade, or temporarily cannot trade.

It will be available to anyone who was previously eligible for the SEISS grant one and grant two, and meets the eligibility criteria.

Grants will be paid in two lump sum instalments each covering three months. The first grant will cover a three-month period from the start of November 2020 until the end of January 2021.

The government will pay a taxable grant which is calculated based on 40 per cent of three months’ average trading profits, paid out in a single instalment and capped at £3,750.

The second grant will cover a three-month period from the start of February until the end of April 2021. The government say that it will review the level of the second grant and set this in due course.

Further details of when these grants will be available and how the assessment of three months’ average trading profits will be calculated, will be provided by HMRC in due course.

Business Grants

The government is providing additional funding to allow local authorities to support businesses in high-alert level areas which are not legally closed, but which are severely impacted by the restrictions on socialising.

The funding will be based on the number of hospitality, hotel, B&B, and leisure businesses in their area.

It will be up to local authorities to determine which businesses are eligible for grant funding in their local areas, and what precise funding to allocate to each business.

Businesses in Very High alert level areas will qualify for greater support whether closed (up to £3,000/month) or open.

In the latter case support is being provided through business support packages provided to local authorities as they move into the alert level.