How will the Coronavirus Job Support Sheme (CJSS) work?
UPDATE: The Chancellor announced changes to the furlough scheme on Thursday 17th December - the update can be read here.
Chancellor Rishi Sunak launched the new coronavirus job support scheme as part of his winter economy plan yesterday. We published an overview immediately afterwards and have received plenty of questions about the detail since.
The winter economy plan FAQs - quick links
The coronavirus job support scheme (CJSS) is the new government scheme being introduced to assist employers in keeping employees in work, rather than make them redundant.
When will the CJSS start?
The CJSS will start on 1 November 2020, immediately after the current furlough scheme ends.
When will the CJSS end?
The CJSS is currently due to run for six months, ending on 30 April 2021.
An employer will have to pay for all the hours an employee works (a minimum of 33%) plus a third of the remaining non-working hours. This means, in practice, the minimum contribution an employer has to pay is 55% of an employee’s normal wages.
How will the job support scheme work?
An employee will have to work for a minimum of 33% of their normal hours and be paid by their employer for this time.
Of the remaining non-working hours, up to the maximum 67%, will be split equally into thirds.
The government will pay the wages for one third, the employer for the second third and the employee will forego payment for the final third.
This means, in practice, an employee will receive a minimum of 77% of their normal wages, subject to a cap on the government contribution of £697.92 per month.
Who is eligible for the CJSS?
All employers with a UK bank account and UK PAYE schemes can claim the grant. Employees must be on an employer’s PAYE payroll on or before 23 September 2020.
Can employers claim the coronavirus job retention scheme AND the job retention bonus scheme?
Employers can claim under both the CJSS and the Coronavirus Job Retention Bonus Scheme (which will pay out £1,000 for each furloughed employee still employed on 31 January 2021) at the same time.
What businesses can claim the CJSS?
Large businesses will have to meet a financial assessment test, so the scheme is only available to those whose turnover is lower now than before experiencing difficulties from Covid-19. There will be no financial assessment test for small and medium enterprises (SMEs).
How do businesses claim the CJSS?
Employers will be able to make a claim online through Gov.uk from December 2020. They will be paid on a monthly basis, with grants payable in arrears after payment to the employee has been made and that payment has been reported to HMRC via an RTI return.
A viable job is one where the employee actually works for at least 33% of their normal hours.
Can you use the CJSS if you weren’t using the furlough scheme?
Yes, neither the employer nor the employee needs to have previously used the Coronavirus Job Retention Scheme.
UPDATE: Announcement on 9th October
The Chancellor, Rishi Sunak, announced on Friday 9 October an extension to the Coronavirus Job Support Scheme. Any businesses asked to legally close by the government over the winter will have two-thirds of their employees' wages paid for by the government.
Also, those closed businesses will be able to obtain increased business grants of up to £3,000 per month, paid fortnightly. The extended scheme will run from 1 November and last, at the moment, for six months. The two-thirds of wages covered by the government for employees of legally closed businesses will be subject to a cap of £2,100 per month.
Loans can now be extended to last 10 years, rather than the current 6 years. Businesses can also take payment holidays and interest-only periods if they need to.
This is the name the Chancellor has give the new, more flexible bounce back loans.
How will the PAYG loan work?
A business, established before 1 March 2020, has until the end of November 2020 to apply and can borrow between £2,000 and £50,000 capped at 25% of annual turnover. No interest will be charged and no repayments will need to be made in the first 12 months, after which all banks will charge a fixed 2.5% annual interest. The loan can now last for 10 years, although it can be repaid early without penalty. Payment holidays or interest-only periods can be taken for up to six months.
What are the new guarantees on CBIL loans?
The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months. I could not find any change to this from April
The VAT rates for these sectors had been reduced from 20% to 5%, to last until 13 January 2021. The reduction has now been extended to 31 March 2021.
A solicitor's view: Head of Employment & HR Paul Burton
“The new CJSS is a lot smaller commitment by the government, estimating to cost between £1 billion and £1.5 billion a month as opposed to £6 billion for the furlough scheme.
We will have to see if it is enough to save the economy, but already there has been criticism that there is not enough support for those businesses that remain closed, particularly in the hospitality and tourism sectors."
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