Grants under this scheme can only be claimed by businesses which are facing reduced demand and at least some of the employees are working reduced hours.
Large employers (250 or more employees) will have to show their sales have been impacted by coronavirus, by comparing the turnover reported on recent VAT returns to those of the same quarter in 2019. Large employers are also expected to withhold dividend and capital distributions from shareholders while using either JSS.
To qualify under JSS Open the employee must work at least 20% of their usual working hours (defined as per the CJRS), and be furloughed for the remainder of those hours. The costs are born as follows:
- Working 20% of usual hours – paid by employer.
- Furloughed 80% of usual hours:
- – 4% (5% x 80%) capped at £125 per month – paid by employer.
- – 49.33% (61.67% x 80%) capped at £1541.75 per month – covered by JSS grant.
In total the employee will receive up to 73.33% of their pay. The employer is permitted to top-up the employee’s furloughed above the caps set by the scheme. However, the employer must pay all of the employer’s NIC plus any employer’s minimum contribution to a workplace pension, in respect of all of the wages the employee receives.
The pay for furloughed time is calculated according to a reference salary, which is the greater of the salary payable:
- for last pay period ending on or before 23 September 2020; or
- in the last pay period ending on or before 19 March 2020.
Where employee has variable pay the reference salary is the greater of:
- wages earned in the same calendar period in 2019/20
- the average wages payable in 2019/20
- the average wages payable from 1 February 2020 (or later employment start date) until 23 September 2020.
There is no requirement for the employees to have been furloughed at an earlier time to be included in a JSS claim, however they must have been paid at least once by the employer (and reported under RTI) in the period 6 April 2019 to 23 September 2020, and still be on the payroll at that later date. This will allow annually paid directors to be included in a JSS claim if they received their annual salary in that period.
Where the pay has been subsidised under either JSS, the amount will qualify as pay for the £1,000 Job Retention Bonus, payable in February 2021, as we described on 8 October.
Written by the Tax Advice Network