Education briefing - Q and A on the forthcoming Job Support Scheme

• United Kingdom

• Education
• Education - Coronavirus

29-10-2020

In previous briefings we have provided guidance on the Coronavirus Job Retention Scheme (“CJRS”) and the fairly limited circumstances in which it can be used by education institutions. The CJRS ends on 31 October 2020.

On 24 September the Government announced that upon the ending of the CJRS it would introduce the Job Support Scheme (“JSS”) to protect jobs in businesses which could operate safely but are facing lower demand over the winter months due to COVID-19 – the intention being that the scheme would enable employers to retain employees on shorter hours.

On 9 October 2020 the Government announced an expansion of the JSS to employers legally required to close due to the pandemic and on 22 October it announced further changes to the JSS.

In this briefing we consider the degree to which education institutions can access the JSS and provide further detail on the eligibility criteria and process.

As mentioned, the JSS now has two parts:

0. A short-time wage subsidy scheme, aimed at protecting jobs in those businesses facing lower demand due to COVID-19 – known as “JSS Open”

0. A closed business wage support scheme, aimed at subsidising employers’ wage costs where they are legally required to close their premises – known as “JSS Closed”

Both parts of the JSS commence on 1 November 2020 and will run for a period of six months. The Government will review the terms of the scheme in January. The Government has published a policy paper explaining the JSS and there is a factsheet available for each scheme (JSS Open and JSS Closed). Further practical guidance is expected by end October.

The latest version of the JSS reflects the recent resurgence in the virus and the introduction of further restrictions on businesses and the public, including the three tier restrictions in England and local lockdown measures in the devolved nations.

Deciding which part of the JSS applies

• JSS Open applies, broadly, where reduced demand results in employees working short-time (a minimum of 20% of their usual hours).

• JSS Closed applies where local or regional coronavirus restrictions legally require business premises to close as a direct result of COVID-19 restrictions set by one or more of the four governments of the UK and employees cannot work at all for seven consecutive days or more.

Employers may access either parts of the JSS even if they have not previously used the CJRS. Employers can claim both the JSS and the CJRS Retention Bonus if they meet the eligibility criteria.

The two parts of the JSS share some similarities, for example, in relation to redundancy restrictions and payment of employee taxes and pension contributions. However, there are significant differences, such as employer eligibility conditions and the generosity of the JSS grants.

Can the JSS be used by education institutions?

As was the case with the CJRS, the Government does not expect the JSS to be used where employees are publicly funded.

In the policy paper it states

“Bodies in receipt of public funds

Organisations that have staff costs that are fully publicly funded (even if they are not in the public sector), should use that money to continue paying their staff, and not use the Job Support Scheme.

Organisations can use the scheme if they are not fully funded by public grants, for the proportion of their revenue disrupted due to coronavirus. They should contact their sponsor department or respective administration for further guidance.

Those that do claim should do so using the same process as all other employers.”

Similarly, in the factsheet for JSS Open it says:

“Fully publicly funded organisations are not expected to use the scheme, as has been the case with the CJRS, but partially publicly funded organisations are eligible where their private revenues have been disrupted.”

Institutions will remember that, following the introduction of the CJRS, the Department for Education published its own guidance for education institutions. It remains to be seen whether it will also do so in respect of the JSS. 

Pending any further clarification, our view is that the same principles will apply to use of the JSS Open by institutions as was the case with the CJRS, namely that:

• an HEI can in principle use the JSS but before doing so should consider the contents of the policy paper and factsheet and evaluate the extent to which the wage costs that might be claimed are not already attributable (to any significant extent) to public funding and that it has made its decisions on a considered basis, applying principles of good governance, and ensuring that there is a clear and defensible rationale for the decision.

• in relation to general FE colleges, in most cases the application of the JSS will be limited but it could apply to those areas of colleges’ services for which public funding has been impacted – in particular the apprenticeship training provision and trading income where activities have reduced as a result of CV19.

• as far as public sixth-form colleges and schools/academies are concerned, it is likely that there will be very limited opportunities to use the JSS.

It is also important to note, as with the CJRS, that agreement for the new working arrangements needs to be reached and recorded in writing (see below for more details).

In relation to JSS Closed, it appears that the same principles will apply (though there is no specific reference to publicly funded bodies in that factsheet). In any event we consider it unlikely, given the Government’s stated aim of keeping education institutions open, that this part of the scheme will have much relevance for education institutions in most circumstances, although there is the possibility that this will change as the situation develops. Therefore we will concentrate below on the rules surrounding the JSS Open, save to say that under JSS Closed the employer pays employees 2/3rds of their normal salary, up to £2,083.33 per month and the Government reimburses the employer for that amount (the employer can top that up). However, please do contact us if you have questions on the rules concerning the JSS Closed.

JSS Open – the rules in more detail

The basic concept is that the employer pays its employees for short-time hours worked, with the cost of the shortfall – i.e. the hours not worked - being split between the employer, the Government and the employee (through a wage reduction).

Which employers are eligible?

JSS Open is available to employers with a UK, Channel Island or Isle of Man bank account and enrolled for PAYE online (with the qualifications mentioned above where they are in receipt of public funded exemption).

Whilst, in most cases, large businesses (i.e. a legal entity with 250 or more employees across their payroll on 23 September 2020) are required to demonstrate that their turnover is lower due to COVID-19 difficulties (the Financial Impact Test), this does not apply where the employer is a charity with 250 or more employees that is registered with a UK charity regulator or is exempt from such registration. Therefore, most education institutions would seem to be excluded from having to perform this test. Bear in mind, however, that institutions can only use the scheme in areas where they are not fully funded by public money and only for the proportion of their revenue disrupted due to coronavirus, so some financial analysis will be needed.

Which employees are eligible?

Employers can only claim for employees that were in their employment on 23 September 2020. If employees ceased employment after 23 September 2020 and were subsequently rehired, then employers can claim for them.

They must be treated as an employee for Income Tax purposes (this will include agency workers if they are employees for Income Tax purposes) and can be on any type of contract, including zero hours or temporary contracts.

A Real Time Information (RTI) submission notifying payment to the employee will need to have been made to HMRC at some point during the period between 5 April 2019 and 23 September 2020.

The employee must continue to work at least 20% of their usual contracted hours.

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.

What agreement is necessary?

To be eligible for the grant, employers must have reached agreement in writing with the employee or with a trade union where the relevant terms are determined by collective agreement.

This agreement must be retained for five years, made available to HMRC on request and a record kept of how many hours the employees work, together with the usual hours they are not working.

HMRC will publish further guidance on what to include in the written agreement by the end of October.

The employer may only commence the JSS Open claim from the later of the date that the employee starts working reduced hours or the date when working reduced hours is confirmed in writing, not when the decision is made. This means that no ‘backdating’ option is available and it is important to get letters in place by 1 November if an employer wishes to claim from the outset (such as with staff moving straight from CJRS to JSS). We can assist with such letters – please contact your usual Eversheds Sutherland advisor.

Can employees agree to undertake training when not working?

Yes. However, where time spent on training attracts a minimum wage entitlement in excess of the grant payment, employers will need to pay the additional wages.

What if employees agree to undertake training when they are working?

Employers can chose to use some or all of the minimum 20% hours to train employees (i.e. paid at their full rate of pay and counting towards 20% of their usual hours). This could assist employers who, due to COVID-19, have little if any ‘normal’ work to allocate to the staff concerned.

What about redundancy restrictions?

Employees cannot be made redundant, be put on notice of redundancy or be serving a contractual or statutory notice period during the period within which their employer is claiming the JSS grant for them.

What is the process for submitting JSS Open claims?

Employers will be able to make a claim online through Gov.uk from 8 December 2020, covering salary for pay periods ending and paid in November, and will be paid on a monthly basis in arrears. This will present a cash flow challenge for some employers.

How much can be claimed under JSS Open?

An employee must work for a minimum of 20% of their usual hours and employers cannot claim for employees’ wages for the time they spend working.

For the remaining usual hours which are not worked (i.e. up to 80% usual hours), the Government will pay 61.67% of hours not worked up to a cap of £1,541.75 per month, with the employer contributing an additional 5% of non-worked hours up to a cap of £125 per month. These caps are based on a monthly reference salary of £3,125. This will ensure employees earn a minimum of at least 73% of their normal wages, where they earn £3,125 a month or less. In addition, the employer will cover the Employer NICs and auto enrolment pension contribution on the payment (£56).

Employers must have paid the full amount claimed for an employee’s wages to the employee before each claim is made. They cannot agree with the employee to reduce wages below the amount claimed (such as a salary sacrifice scheme). This includes any administration charge, fees or other costs in connection with the employment.

Where an employee had authorised their employer to make deductions from their net salary, these deductions can continue while the employee is working reduced hours provided that these deductions are not administration charges, fees or other costs in connection with the employment (for example, pension contributions and charitable giving).

Can the employer top-up pay?

Yes, an employer can top up the employee’s wages above the 5% contribution at their own discretion.

What rate of pay is used to calculate usual pay?

The calculations follow a similar methodology as for the CJRS, using a “reference salary” made up of the regular payments an employer is obliged to make, such as regular wages

and non-discretionary payments for hours worked, including overtime, but excluding payments made at the discretion of the employer or a client, where they were under no contractual obligation to pay.

Note that the Government has committed to introducing legislation to ensure that parents do not lose (as a result on being on JSS) their entitlement to maternity allowance, statutory maternity, paternity, shared parental, adoption and parental bereavement pay.

How are an employee’s usual hours calculated?

The policy paper provides guidance and a number of examples for calculating fixed or variable hours. Full sample calculations are promised in the guidance at the end of October.

In broad terms, the employer must take the higher of various calculation alternatives to obtain the reference hours and reference pay for the purposes of the claim.

How will HMRC monitor the operation of the JSS Open?

Employers must ensure that grants are used as reimbursement for wage costs actually incurred.

HMRC have said that they will check claims. As with the CJRS, payments may be withheld or need to be paid back, with penalties, if a claim is found to be fraudulent or based on incorrect information. Furthermore, HMRC intend to publish the names of employers who have used the scheme so that the public can report fraud to HMRC if they have evidence to suggest an employer is abusing the scheme and employees will be able to check if their employer has made a claim relating to them. This is clearly intended to serve as an additional anti-fraud measure.