1. Since our first report on the CJRS, or “Furlough” Scheme, there have been no fewer than four further updates to the HMRC. The most recent Guidance can be found here:
2. The HMRC Claims Portal went live on 20th April and to assist with this, and the mechanics of making a claim, as well as how to calculate the wages to be claimed, two further sets of guidance have been issued:
3. Finally, a Treasury Direction has been published, being the legal framework that the HMRC will operate the Scheme by:
Commentary and Key Points
There is a lot to keep up with here, but the most significant new points seem to be:
1. The Scheme itself has now been extended until the end of June 2020 following an announcement earlier this afternoon.
2. The Direction stipulates that a furloughed employee is only eligible under the Scheme “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 all work in relation to their employment”.
Whilst this is good practice which we have advised to deal with the variation of the contract, it is in stark contrast to the Guidance. This originally only required that the Employer evidences in writing that the employee has been furloughed. It was updated following the Direction,and now states:-
“If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response”
Technically the Directive represents the legal position, however It is to be hoped and appears likely therefore that HMRC policy on the need for agreement will follow the Guidance itself and thus an employer will be permitted to access the scheme where it has the agreement of the employee to being furloughed, irrespective of whether the agreement is in writing. A record of the communication must be kept for 5 years however.
3. Employees on the payroll as at 19th March are now potentially eligible (moved from 28th February).
(The Guidance clarifies that being on an employer’s payroll for these purposes means that an RTI submission notifying payment in respect of the employee must have been made to HMRC on or before 19 March 2020. Employees who were on an employer’s payroll on 28 February 2020 but were subsequently made redundant, or otherwise left their employment before 19 March 2020, can be furloughed if they were or are re-employed, whether this is before or after 19 March 2020).
4. For employees with a fixed salary, the salary reference date for the purposes of calculating furlough pay has been amended to the last pay period before 19 March 2020, rather than the employee’s salary as at 28 February 2020. However, if the employer has already calculated the employee’s salary using the 28 February 2020 date set out in the previous version of the guidance, it can use this calculation for the purposes of its first furlough claim.
5. There are quite complex arrangements covered in the Guidance, around the furlough of staff on sick leave or who become sick, and the interaction with SSP. There is some further contradiction here between the Guidance and the Direction and further clarification is necessary. What is clear, is that an employee cannot be off sick and claiming SSP or sick pay and be furloughed at the same time unless they fall into the narrow category of a Shielded worker who was furloughed prior to 15 April but who now has newly acquired status of being deemed sick for SSP purposes. Such an employee may continue to enjoy furloughed status.
6. Both the Guidance and Direction remained silent on the question of Annual Leave during furlough until shortly before the portal went live. ACAS have updated its guidance on this no fewer than 3 times in the last 10 days, (found here). The position is now clear that annual leave may be taken during furlough. Any holiday including Bank Holidays are to be paid at the employee’s full rate of pay, and only the reduced amount may be claimed through the Scheme.
7. One further interesting point that remains unclear is the relationship between furlough and redundancy. It is clear that the language of the Guidance has relaxed considerably from the outset, in that it now no longer appears to be a requirement that an individual can only be furloughed if they otherwise would have been made redundant.
The Guidance makes it clear that all employment rights continue during furlough, including in relation to redundancy payments and it is envisaged therefore that redundancies may occur during or after furlough. This is the stark reality many employers are already having to grapple with and make tough decisions over.
The Guidance also specifies that Redundancy payments cannot be claimed back under the Scheme. It is not clear whether this simply means Statutory Redundancy Payments or any payments associated with a redundancy (i.e a notice payment for example). If an employer were to serve notice of redundancy, can they claim the wages paid during the notice period spent on furlough, under the Scheme? It is definitely a point on which clarification is required.
For further advice or assistance on these issues please contact any member of the Employment Team.
This article is accurate as at 21 April 2020. Please check our COVID-19 Business Support page for up to date developments.