This update reflects the position as at 21 April 2020
Since we published our last update on the Coronavirus Job Retention Scheme (“CJRS”) (which can be viewed here), there have been a number of further developments. On 8 April 2020, HMRC provided information on the implementation of the CJRS, and on 9 and 15 April 2020 the government issued further updates to the CJRS guidance (the “Guidance”). Also on 15 April 2020 the Treasury issued a Direction to HMRC setting out the rules for making payments under the CJRS (the “Direction”).
Taking all of these developments together, we have summarised the latest issues for employers below.
Key Points for Employers
1. The CJRS online portal is due to open on 20 April 2020. HMRC aims to pay employers within four to six working days after submission of their claim. New operational guidance will be published shortly to assist employers with claims.
2. The qualifying date for when the employee has to have been on the employer’s PAYE payroll has changed from 28 February to 19 March 2020. We understand from the Direction that this means a PAYE submission must have actually been made for the employee in question i.e. not just that the employee has “started” work. This change means that a large number of individuals who would not previously have been covered by the CJRS because they had recently changed jobs are now covered.
3. The Direction states that, in order to furlough an employee they must have been “instructed by the employer to cease all work in relation to their employment” and that this will only have happened “if the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease work”. The Guidance did not go this far, stating: “To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed.” This is a significant inconsistency which employers may need to seek advice on in order to ensure their claims under the CJRS are valid.
4. There are inconsistencies in the Guidance and the Direction on the issue of whether someone receiving statutory sick pay can be placed on furlough. We urge employers who are grappling with this issue to take advice.
5. The Guidance clarifies that employees cannot work for organisations that are “linked to” or “associated with” their employer (as well as not working for their employer) when on furlough. There is no explanation given as to the meaning of these terms. The Direction, however, states that employees must have ceased all work for the employer and any person who is “connected” to the employer (as defined in relevant tax legislation).
6. The Direction gives more information about what types of payment can be claimed for and includes a definition of “regular salary or wages” for the purposes of calculating an employee’s reference salary.
7. In relation to fraud prevention, HMRC will investigate claims after the event. It will be able to claw-back funds from employers where it determines erroneous payments were made and take action against those who have knowingly tried to defraud it. HMRC has built into the CJRS a number of measures which will assist in preventing fraud or abuse.
Further Issues to Note
In addition, the Guidance and Direction set out further detail on the interaction of the CJRS with unpaid leave, TUPE transfers and employees undertaking training during furlough.
What about holiday?
The Guidance is still silent on the issue of whether holiday can be taken during furlough and, if so, at what rate it should be paid. The Direction is also silent on this issue.
Acas updated its guidance on 9 April 2020 in relation to this question highlighting the need for flexibility from both sides when looking at holiday arrangements. It states that holiday and bank holidays can be taken “in the usual way” during furlough leave and that employees and workers “must get their usual pay in full” for any holidays they take. However, it is important to note that the Acas guidance is not official government guidance and so employers would be wise to treat it cautiously.
Our earlier update here explains the new rules allowing workers to carry holiday that is untaken due to coronavirus into the next two holiday years.
We can help
The issues that are arising under the Guidance and Direction are numerous and the interplay between the CJRS and existing employment law is complex.
Do get in touch if you need any help with these or any other employment law issues.