Guidance published on extended Coronavirus Job Retention Scheme (CJRS)
16 November 2020
On the 10th November, the government released its much-anticipated guidance on the extended CJRS, ‘Check if you can claim for your employees’ wages through the CJRS’and we have summarised the main points to note below:
- As previously indicated, the CJRS will now remain open until 31 March 2021.
- From 1 November 2020 employers can claim 80% of an employee’s usual salary for hours not worked (up to a maximum £2,500 per month). Employers can also furlough employees flexibly for any amount of time and any work pattern, whilst still being able to claim a furlough payment for the hours not worked.
- Employers can continue to claim for periods ending on or before 31 October 2020 until the deadline of 30 November 2020, however, employers will need to contribute towards the cost of their furloughed employees’ wages for these periods.
- From 1 November 2020, under the extended CJRS, employers will only need to pay for the cost of employer National Insurance and pension contributions. However, the government has already indicated that it will review the scheme in January 2021, so this position may change.
- Employers are now able to claim for claim periods starting on or after 1 November 2020.
- However, if employers are claiming for a period that starts on or after 1 November 2020, they are only entitled to claim in respect of furloughed employees who were employed and on payroll on 30 October 2020. The employer must have made a PAYE RTI submission to HMRC between 20 March 2020 and 30 October 2020 notifying a payment of earnings for that employee. However, this may differ where an employer has re-employed an employee after 23 September 2020 (more on this below).
- If an employer has made employees redundant, or employees stopped working for them on or after 23 September 2020, employers can now re-employ these employees and put them on furlough. This applies where the employee was employed and on the employer’s PAYE payroll on or before 23 September 2020. The RTI submission notifying payment in respect of that employee to HMRC must have been made between 20 March and 23 September 2020.
- There is no maximum number of employees in respect of whom employers can claim a furlough payment from 1 November 2020.
- Provided that it is consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid as long as it is made in accordance with the following conditions:
- the agreement is in writing and it is retained for five years;
- the agreement is consistent with employment, equality and discrimination laws; and
- a record is kept of how many hours employees work and the number of hours they are furloughed.
However, only retrospective agreements which were entered into up to and including 13 November 2020 may be relied on for the purposes of a claim related to this period.
It is also important to note that this current guidance makes it clear that from December 2020, HMRC will publish employer names for companies and Limited Liability Partnerships and the company registration number of those who have made claims under the CJRS from December onwards. The new CJRS Treasury Direction, which can be accessed by clicking here, also provides that HMRC will publish a “reasonable indication” of the amount claimed. However, an exception may be made for employers who can show that any such publication would expose their workforce to “serious risk of violence or intimidation”.
As suspected, the new CJRS Treasury Direction also confirms that employers cannot make claims under the CJRS for any day that an employee is serving statutory or contractual notice between 1 December 2020 and 31 January 2021.
For further advice on Coronavirus Covid-19 related employment queries please contact our dedicated Employment and HR Services team.
Coronavirus Job Retention Scheme (CJRS) extended until the end of March
5 November 2020
Today, the Chancellor has announced that the CJRS is to be extended until 31 March 2021. Under the extended CJRS, employees who are unable to work because of the coronavirus regulations will receive 80% of their usual salary up to a maximum of £2,500 per month with employers only being required to contribute employer National Insurance and pension contributions. The policy relating to this extension is set to be reviewed in January. At this point, the government will consider whether employers should have to make further contributions to the scheme.
The extended CJRS will be available to Wales, Scotland, Northern Ireland and England equally throughout the relevant period.
The government is due to publish full guidance on 10 November, however, we currently know the following from the HMRC Policy Paper:
- Employers can claim under the CJRS even if they have not used the CJRS previously.
- Employers can claim under the CJRS whether their businesses are open or closed.
- Employees who have previously been furloughed continue to have their reference pay and hours based on the existing furlough calculations (as under the old scheme). Employees who have not previously been furloughed will have a different pay/hours reference period – we await the full guidance on this but it looks like this is likely to mean the following*:
- For those with fixed wages = pay to be based on 80% of the wages payable in the last pay period ending on or before 30 October 2020
- For those on variable, wages = 80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their furlough period begins under the extended CJRS.
- Employers can place employees who are shielding on furlough leave.
- Employers can place employees who are unable to work because they have caring responsibilities resulting from coronavirus on furlough leave.
- Employers must write to their employees to confirm that they have been furloughed or flexibly furloughed in order to be eligible for the grant.
- Employees that were on the payroll on 23 September 2020 who were made redundant or stopped working after that date can be re-employed and placed on furlough leave
As part of the announcement, the Chancellor also confirmed that the retention bonus of £1,000 for any furloughed worker kept in a job until February is to be postponed until a later date along with the Job Support Scheme.
This announcement may well prompt employers to review any ongoing redundancy consultation processes (even if these have already commenced) to determine whether these ought to be amended in light of the extension to the CJRS.
*we will provide a further update once the full guidance is published on 10 November 2020 if this changes the position.
For further advice on Coronavirus Covid-19 related employment queries please contact our dedicated Employment and HR Services team.
New Treasury Direction and Guidance on the CJRS Job Retention Bonus
5 October 2020
Taking us back to the tradition of early days of the CJRS guidance, the government released further guidance relating to the CJRS Job Retention Bonus together with the applicable Treasury Directionon Friday afternoon.
The CJRS Job Retention Bonus was announced by the Chancellor, Rishi Sunak, back in July as part of the government’s “Plan for Jobs 2020”. It is designed to reward and incentivise employers who bring back employees from furlough.
There is nothing particularly surprising in the Treasury Direction or guidance. In summary, both confirm that:
- Qualifying employers will receive a one-off taxable payment of £1,000 per eligible employee who has been brought back to work from furlough
- It applies in relation to employees who:
- have been on furlough (regardless of the length of time)
- remain employed and not under notice as of 31 January 2021; and
- are paid at least £1,560 in total between November and the end of January (i.e. at least £520, on average, in each month but only one payment needs to be made)
- The bonus is for the employer and it is not required to pass on the payment to the employee
- Employers can submit claims for the Job Retention Bonus between 15 February and 31 March 2021.
Employers can still claim the CJRS Job Retention Bonus even if they make a claim for that employee through the new Job Support Scheme(more info on our rolling feed).
For further advice on Coronavirus Covid-19 related employment queries please contact our dedicated Employment and HR Services team.
What next for workforce planning?
23 September 2020
On 12 May 2020, there was “good news” from the Treasury when the Chancellor announced that the Coronavirus Job Retention Scheme (CJRS) would be extended to the end of October 2020.
Further updates followed regarding details of the “flexible furlough scheme” in operation from 1 July 2020 and then the start of employers’ contributions to furlough pay from 1 August 2020 (starting with employer NI and pension contributions and rising to 20% of pay from October 2020)
So as the CJRS enters its final month of operation, what are the current implications for business and workforce planning?
While many employers have been able to shoulder the burden of the increased contributions to payments under the CJRS, the end of the scheme on 31 October 2020 represents a point at which a significant number will simply be unable to return to paying employees at their usual salary levels. In the absence of the contractual ability to use measures such as using lay off / short-time working (which may only represent a temporary solution in any event), it is inevitable that many employers will need to look to implement redundancy programmes to try and weather the downturn in business which has already occurred and is likely to continue into 2021.
At this point in the lifecycle of the CJRS, there is still the potential for employers to utilise the assistance under the CJRS alongside the implementation of a redundancy programme. The government has made it clear that while grants under the scheme cannot be used to substitute redundancy payments, it is possible to continue to claim for a furloughed employee who is serving a statutory notice period.
What employers will need to be mindful of at this stage is whether any redundancy programme will be affecting more than 20 dismissals within a 90 day period at one establishment (and therefore subject to collective consultation) or not. If fewer than 20 employees will be made redundant (and an employer is individually consulting on the redundancies) then it should be possible for employers to maximise the remaining weeks of the CJRS by using the scheme to pay some / all of its redundant employees’ notice pay once it has completed its reasonable consultation process.
If, however, more than 20 employees are to be dismissed, the timescales required to collectively consult before the first dismissal takes effect (30 days for 20-99 redundancies, 45 days for 100+ redundancies) means that it is unlikely that an employer will now be able to use the remaining weeks of the CJRS to pay off part of the notice pay. What may still be possible, however, is for those employers who need to collectively consult to use assistance under the CJRS while they commence their consultation processes which will at least mean the redundancy process is underway during the last few weeks of the scheme. Although this may not cover the entirety of a collective consultation process, it will at least go some way to mitigating the costs for employers.
Given the announcements made by the Prime Minister yesterday, many news outlets are reporting that there are likely to be further announcements this week from Rishi Sunak regarding ongoing subsidy arrangements post-CJRS. We will be keeping a close eye on any rescue packages which the Chancellor may announce this week and will send out further updates on the implications of these if such measures are to be implemented.
The new law introduced to ensure that furloughed employees receive full redundancy payments
30 July 2020
In a move to protect furloughed employees, the government has announced today that it has introduced a new law to ensure that furloughed employees receive statutory redundancy payments based on their normal wages, rather than their reduced furlough rate (which is potentially 80% of their normal wage).
This means that employees who receive regular fixed salaries will get redundancy payments based on their normal salary. Employees with varying hours or earnings will receive a payment based on the average of their last 12 weeks of work. However, the legislation ensures that employers must treat any weeks spent on furlough leave over the 12 week reference period as if the employee was working and on 100% pay.
The changes will also apply to Statutory Notice Pay to ensure that employees are paid in full for their statutory notice instead of at a reduced rate based on the pay they have received whilst they have been on furlough leave.
The new legislation has been published today and it will come into force from tomorrow (31 July). The government announcement can be accessed by clicking here.
Flexible furlough – new Treasury Direction published
30 June 2020
The new Treasury Direction was released on 26 June 2020 and provides the legal framework for the flexible furlough scheme. As set out in our previous update, employers have the ability to flexibly furlough employees from 1 July until 31 October 2020, (subject to the requirements set out in our previous update and mirrored in the Direction).
The Direction offers further clarification on the following:
- From 1 July, all furloughed employees will be treated as being flexibly furloughed even if they are not carrying out any work for their employer.
- In order to make use of the flexible furlough scheme, the Direction confirms that eligible employees must have been furloughed for the minimum, consecutive three-week period prior to 1 July 2020, (meaning that the latest date in which new entrants could have been furloughed was 10 June 2020).
- Employees returning from a type of statutory family leave or armed forces reservists are exempt from the restriction on “new” furlough entrants.
- Employers are still required to agree flexible furlough arrangements with employees but the agreement can be confirmed in writing (employers may therefore verbally agree arrangements with employees provided this is followed up in writing, whether by letter or email). However, the Direction confirms that an agreement can subsequently be varied to reflect any variation agreed during the period to which the claim relates.
- Agreements must have been reached before the beginning of the period to which the claim under CJRS relates, preventing employers from reaching retrospective agreements with employees.
- The scheme should be used to “continue the employment of employees.” This wording has caused much confusion, particularly for employers who intend to or are using the scheme in the midst of redundancy consultations. Similarly, employers may intend to use the scheme to fund notice periods. We understand that requests for urgent clarification on this issue have been made and we will keep you updated as and when further detail becomes available.
- The Direction provides worked examples of the amounts payable by an employer under the scheme in circumstances where an employee is flexibly furloughed. Due to the hideously complex nature of the calculations, some employers have opted to keep some employees on full furlough, where possible.
Claimed too much under the CJRS? How to pay it back
30 June 2020
The government has released further guidance on how to pay all or some of the grant back where employers have over-claimed under the Coronavirus Job Retention Scheme (“CJRS”).
Employers may either:
- correct the overpayment in their next claim; or
- make a payment to HMRC (where no further claims are to be made under the CJRS).
Provided employers have a payment reference number (which they can obtain from HMRC) employers can pay HMRC directly using the account details provided.
Government publishes detail on the changes to the Coronavirus Job Retention Scheme (CJRS)
16 June 2020
On 12 June 2020, the government published a policy paper which outlines the changes being made to the CJRS from 1 July.
Under the Flexible Furlough Scheme (FFS) which is being introduced from 1 July 2020, employees will be able to do some work for their employer when work is available and be furloughed at times where there is no work. We have summarised the main changes previously (scroll down to view our previous blog published on 1 June), but we have also summarised the main points from the updated guidance below. The policy paper can be accessed by clicking here.
- There are no changes to the CJRS in June.
- During June and July, the government will pay 80% of furloughed employees’ wages up to a cap of £2,500 for the hours the employee is on furlough, in addition to employer National Insurance Contributions and pension contributions. Employers will only be required to pay employees for the hours that they work.
- During August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough leave. Employers will be required to pay employer National Insurance Contributions and pension contributions for the time the employee is furloughed.
- During September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours an employee is on furlough leave. Employers will be required to pay employer National Insurance Contributions and pension contributions for the time the employee is furloughed. Employers will also be required to top up employees’ wages to ensure that they continue to receive 80% of their wages (up to a cap of £2,500) for the time they are on furlough leave.
- During October, the government will pay 60% of wages up to a cap of £1,875 for the hours an employee is on furlough leave. Employers will be required to pay employer National Insurance Contributions and pension contributions for the time the employee is furloughed. Employers will also be required to top up employees’ wages to ensure that they continue to receive 80% of their wages (up to a cap of £2,500) for the time they are on furlough leave.
The policy paper makes it clear that employers can continue to choose to top up employees’ wages to 100% if they wish to do so. However, employers must ensure that they pay their employees for the hours worked.
In addition to the above policy paper, the government also made changes to its existing guidance as well as issuing three new pieces of guidance. We have summarised the key changes below:
- The ‘Check if you can claim for your employees’ wages through the CJRS’ guidance has been updated to include details on how the CJRS is changing from 1 July. This guidance confirms that flexible furlough agreements can last any amount of time; however, the period that the employer claims for must be for a minimum claim period of 7 calendar days.
- The ‘Check which employees you can put on furlough to use the CJRS’ guidance has been updated. This guidance confirms that employers can only claim grants in respect of employees that they have previously furloughed for the minimum period of three consecutive weeks between 1 March 2020 and 30 June 2020. This guidance also states that the number of employees which an employer claims for in any claim period from 1 July 2020 cannot exceed the maximum number of employees claimed for under any claim ending by 30 June 2020 plus any employees being furloughed for the first time due to them returning from parental leave. This guidance also confirms that an employee returning from statutory parental leave after 10 June can be furloughed for the first time provided that the employer has previously submitted a claim for any employee in their organisation for at least three consecutive weeks between 10 June and the employee has returned from that leave after 10 June. Also, the employee must have been on the employer’s PAYE payroll on or before 19 March 2020.
- New guidance ‘Steps to take before calculating your claim using the CJRS’ has now been published. This guidance details the length of claim periods, what to include when calculating wages and working out employees’ usual and furloughed hours before calculating how much can be claimed.
- New guidance ‘Calculate how much you can claim using the CJRS’ has also now been published. This guidance sets out how much employers have to pay furloughed employees for hours on furlough leave, how much employers can claim for employer National Insurance Contributions and pension contributions and how much can be claimed back.
- The ‘Claim for wages through the CJRS’ guidance has now been updated to reflect what employers will need to make a claim under the CJRS from 1 July 2020.
- The ‘Reporting employees’ wages to HMRC when you’ve claimed through the CJRS’ guidance has now been updated in relation to how and when to report employees’ wages to HMRC using the PAYE Real Time Information System.
- The government has also published an example of how to calculate the amount that should be claimed in respect of an employee who is flexibly furloughed. This calculation sets out each step that an employer must take when claiming through the CJRS. This can be accessed by clicking here.
- The government has also updated its examples of how to calculate employees’ wages to include employees who are flexibly furloughed. These can be accessed by clicking here.
The consultation on the draft legislation giving HMRC powers to recover CJRS payments and issue penalties closed at 11.45pm on 12 June. Scroll down to read our previous blog on the draft legislation, the importance of reporting mistakes and the things that employers should be doing now in anticipation of this legislation coming into force.
Employees on paternity and maternity leave who return to work in the coming months will be eligible for the Coronavirus Job Retention Scheme (CJRS)
10 June 2020
As noted in our previous post below, the CJRS has been extended until October, with flexible-furlough being introduced from 1 July. To enable the introduction of part-time furloughing, the CJRS will close to new entrants on 30 June. This means that employees must have been on the CJRS by 10 June.
This was a concern for many employers who had employees on a form of family leave due to return after this date as it appeared that these employees would not be able to be furloughed after their return, even if the business remained closed or only able to open part-time.
This issue was recognised by the charity, Maternity Action, who wrote to the Chancellor to call for parents on family leave to be exempt from the new CJRS cut-off date of 10 June 2020. Maternity Action pointed out that the cut-off date would leave many parents at risk of redundancy where their workplace has not fully re-opened by the end of their family leave and they are not able to be furloughed.
Yesterday evening, the government announced in a short news story published on its website that parents on “statutory maternity and paternity leave” who return to work in the new few months will be able to be furloughed after the cut-off date of 10 June. However, this will only apply where their employer has previously furloughed other employees. The footnotes to the announcement confirm that this will also include adoption leave, shared parental leave, and parental bereavement leave.
This will be a welcome announcement for both employers and employees alike. More details of the change will be included in the updated guidance which is due to be published on 12 June.
Draft legislation giving HMRC powers to recover CJRS payments and issue penalties
10 June 2020
On 29 May, the government opened a consultation on the draft legislation which introduces rules on the taxation of COVID-19 business support grants. The consultation closes at 11.45pm on 12 June. The consultation can be found here.
The draft legislation will ensure that grants are treated as income where the business is within the scope of either Income Tax or Corporation Tax. It also gives HMRC the following powers in relation to the coronavirus job retention scheme (CJRS):
- It gives HMRC the power to raise assessments against anyone in receipt of a CJRS payment to which they are not entitled or has not been used in full to pay employees on furlough leave;
- It gives HMRC powers to charge a penalty where a person makes an incorrect claim or does not use it as intended; and
- It gives HMRC powers to make a company officer jointly and severally liable where the officer is culpable in the action.
HMRC will also be able to charge a penalty in cases of deliberate non-compliance. The penalty will only apply where a person knowingly fails to notify HMRC of the situation within 30 days, or 30 days after the Finance Bill is enacted if it arose before that.
In anticipation of this, employers should ensure that they have detailed records of their decisions to place employees on furlough leave along with evidence of them paying the grant to furloughed employees. Employers should also seek to retain evidence which shows that furloughed employees would have still been employed if the current pandemic had not happened.
Employers should review any grants claimed under the CJRS and seek to correct any mistakes in advance of the first obligation to self-declare mistakes which is 30 days after Royal Assent of the Finance Bill 2020 (which should be sometime in July).
Employers should also write to furloughed employees to confirm that they should not be working whilst they are on furlough leave and ensure that non-furloughed employees do not involve any furloughed colleagues in work-related matters.
Employers who are unsure as to whether they qualify for a grant under the CJRS or whether they have applied for the grant correctly should take legal advice. Directors may also need to take legal advice about how to protect themselves from any potential liabilities arising under the draft legislation.
Update to the Coronavirus Job Retention Scheme (CJRS)
In keeping with the tradition of making important announcements relating to the CJRS on a Friday evening, Chancellor Rishi Sunak announced reforms to the CJRS during the government’s daily press conference on 29 May. The updated CJRS can be found here and we have summarised the key points below:
- The furlough scheme will be closed to new entrants on 30 June 2020. This is significant as it means that employers will be unable to place any more employees (who have not been previously furloughed) on furlough leave after 10 June 2020. This is to allow sufficient time for them to complete the minimum 3 week period of furlough before the CJRS is closed to new applicants on 30 June.
- ‘Flexible furlough’ is going to be introduced from 1 July. This means that employees who have previously been furloughed will be able to work part-time and be furloughed part-time. It will be for employers to decide how that will work in terms of the time spent on furlough and the time spent in work, but it fundamentally changes the CJRS so that employees will be able to do some work for their employers (which they have been absolutely prevented from doing to date). The employer can however still claim under the CJRS for any hours that the employee is not required to work.
- Employees should be paid their “normal” pay when they are working. They will then be paid at the agreed furlough rate (with the employer being able to claim back the CJRS grant) for the remainder of their other usual hours that they are not required to work.
- Although further guidance is still awaited, it appears that employers will be able to use “flexible furlough” as they choose and in a way that suits their business needs, which are likely to vary from company to company. For example, it appears that the working arrangements will be able to change from one week to the next and some employees can be brought back to work on “flexible furlough” whereas others may still need to remain on normal furlough.
- Although “flexible furlough” is an option, employees can remain on full-time furlough if there is still no work for them to do.
- It is worth noting that any changes to an employees’ furlough arrangements are likely to need new furlough agreements put in place. In line with the new Treasury Direction (scroll down to our previous update below), these records will need to be kept until 30 June 2025.
- From 1 August employers will no longer be able to reclaim employee’s national insurance contributions and pension contributions through the CJRS. Instead, employers will have to make these payments. Employees will however still be entitled to receive 80% of their pay up to a maximum of £2,500 per month (or other agreed furlough amount) and this will be recoverable from the CJRS.
- From 1 September, employers will only be able to claim 70% of furloughed employees’ wages through the CJRS (up to a maximum of £2,190) and they must continue to pay employer national insurance and pension contributions. Employers must “top-up” the furloughed employees’ wages to 80% or more subject to what the employer has agreed with the employee.
- From 1 October, employers will only be able to claim 60% of furloughed employees’ wages through the CJRS (up to a maximum of £1,875). Employers must “top-up” the furloughed employees’ wages to 80% (or more).
- The CJRS will close on 31 October 2020.
This will hopefully be welcome news for employers who are keen to take steps to resume “business as usual” but who continue to have their operations severely affected by Coronavirus.
Unfortunately, despite the extension of the CJRS until October and the introduction of flexible furlough, it is also likely to become clear to many employers in the coming days and weeks that redundancies will be inevitable. These employers will need to consider and commence collective consultation processes very shortly as these obligations are triggered when an employer is “proposing to dismiss” over 20 staff within a period of 90 days or less. There is a strict minimum 30 day consultation period (where 20 or more employees are affected) or 45 day consultation period where (100 or more employees are affected) which must be followed. We would strongly encourage any employers who find themselves in this situation to take advice at the earliest opportunity as there can be significant consequences of failing to comply with these collective consultation obligations.
Further, more detailed guidance on “flexible furlough” is expected on 12 June 2020.
The Coronavirus Job Retention Scheme (CJRS) – New Treasury Direction
27 May 2020
On Friday 22 May, the government published a new Treasury Direction which amends the previous Direction issued on 15 April.
The Direction is important as this is the legal framework for the CJRS. HMRC has however stated that their interpretation of the Direction is as set out in the government guidance. Claims under the CJRS made after 22 May will have to comply with the new Direction.
Along with several other key points which will be discussed further below, the new Direction importantly extends the CJRS until 30 June 2020. However, as the government has already announced that the CJRS will be extended in its current form until 31 July, a further Direction will be needed to cover this period. A new Direction will also be required to explain how the CJRS will operate between August and October.
The key points to note from the new Direction are as follows:
- The new Direction now removes the explicit requirement that an agreement to furlough must be in writing. This was a concern for many employers who had to react promptly when the CJRS was first introduced and who perhaps did not seek express agreement or found it difficult to achieve this in practice. Instead, the new Direction provides that agreement must either be in writing or confirmed in writing by the employer. The new Direction also suggests that an agreement to furlough can be express or implied.
- The new Direction also states that the agreement can be made by virtue of a collective agreement between an employer and a trade union.
- The new Direction confirms that the requirement of obtaining agreement or confirmation in ‘writing’ includes email.
- The new Direction states that it a requirement that any such agreement must specify ‘the main terms and conditions upon which the employee will cease all work’. This is new and it is not entirely clear what is intended by this, but we assume that this is just intended to cover any agreed reductions in pay or benefits, or any other contractual modifications, such as a relaxation of restrictions on employees working for other employers.
- Despite these changes, it is important to note that there is still a requirement for agreement more generally and for a written record of that agreement to be made and kept. This agreement (including a collective agreement) or confirmation of that agreement is retained by the employer until at least 30 June 2025.
- The new Direction appears to imply that an employer and employee can now agree to end a period of SSP in order to start a period of furlough leave. This may be of assistance for shielding employees who otherwise currently remain entitled to SSP by virtue of the new regulations covering this area (link to SSP update blog).
- One area that remains unclear is that of unpaid leave. The new Direction states that if a period of unpaid leave commenced before 1 March (and agreement was reached before 20 March 2020 to end it earlier than originally planned), the CJRS can be accessed in respect of that employee after the revised end-date. However, it states that no claim under the CJRS can be made for a period of unpaid leave between 1 March and 30 June. This appears to suggest that employees who commenced a period of unpaid leave after 1 March are ineligible to be furloughed. This, in our view, is inconsistent with the government guidance (link), which very clearly states that employees who were placed on unpaid leave after 28 February can be furloughed. We hope that this position will be clarified in the new version of the Direction that will need to be published to further extend the CJRS.
- The new Direction has clarified that when calculating the 80% pay, non-discretionary payments such as overtime, fees and commissions and payments ‘made in recognition of the employee undertaking additional or exceptional responsibilities’ can be included as ‘regular pay’ if the obligation to pay arises from a legally enforceable agreement, understanding, scheme, transaction or series of transactions. However, it clarifies that benefits in kind or anything provided in lieu of a cash payment otherwise payable, including salary sacrifice schemes are not recoverable. The new Direction has removed the ‘not conditional on any matter’ wording from the definition of ‘regular pay’.
- The new Direction has changed the relevant date for TUPE transfers from 19 March to 28 February. This enables employers to claim for employees who transferred after 28 February even if there was no RTI submission before 19 March. Whilst this specifically still includes business transfers from an insolvent transferor, there is still no specific mention of service provision changes.
The new Direction can be accessed by clicking here. We are expecting a further announcement regarding the changes to the CJRS as from August later this week.
Government publishes further update on the Coronavirus Job Retention Scheme (CJRS)
18 May 2020
Last week, the government published yet a further update to its guidance on the CJRS. The updated guidance can be accessed by clicking here but we have summarised the main changes below:
- The government has added information relating to the extension of the CJRS. The guidance now provides that the CJRS will continue in its current form until the end of July. From August, employers currently using the scheme will have more flexibility to bring their furloughed employees back to work on a part-time basis whilst still receiving support from the CJRS. This will run until the end of October.
- The guidance confirms that from August to the end of October employers will be asked to pay a percentage towards the salaries of their furloughed staff. The employer payments will subsidise the contribution the government is currently making. It is not yet known what the employer contribution will be but further guidance is expected by the end of this month.
- Furloughed members of staff will continue to receive 80% of their salary, up to £2,500 until the scheme ends.
- The guidance has been amended to explicitly state that employees can volunteer for another employer or organisation while they are on furlough leave.
- The ‘Employees that you can claim for’ section which previously appeared in this guidance has now been moved to a new guide called ‘Check which employees you can put on furlough to use the Coronavirus Job retention Scheme’. This guidance can be accessed here.
Coronavirus Job Retention Scheme (CJRS) extended until the end of October 2020
12 May 2020
Today, Chancellor Rishi Sunak announced that the CJRS is going to be extended until the end of October. To date, the government has announced that the CJRS has protected 7.5 million workers and almost 1 million businesses.
The Chancellor has made it clear that there will be no change in the scheme until at least the end of July. However, from August to October the scheme will continue, for all sectors and across all regions of the UK, but with “greater flexibility” with the aim of getting employees back to work and boosting the economy.
From August, it is suggested that furloughed workers will be able to return to work on a part-time basis with employers being asked to pay a percentage towards the salaries of their furloughed workers. We do not yet know exactly what this will look like in practice, but the government’s announcement states that the payments made by employers will “substitute” the government’s current contribution to ensure that all furloughed workers continue to receive 80% of their salary, up to £2,500 a month.
The government has stated that it intends to provide further specific detail and information on the extension of the scheme and its implementation by the end of this month. The government has also stated it will explore ways through which furloughed workers who wish to do additional training or learn new skills can be supported during this period.
Government publishes further update on the Coronavirus Job Retention Scheme (CJRS)
01 May 2020
The government published the latest version of the CJRS guidance yesterday. There are no major changes this time but the government has helpfully made it clear that an employee will not be in breach of furlough if they undertake duties and activities for the purposes of individual or collective consultation. This clarification is helpful as it means that employers who already know that they may need to make redundancies once the CJRS ends, will be able to start consultation processes with their employees. It also clarifies that normal employee casework can continue as representatives will not be in breach of the furlough rules if they accompany a colleague to a disciplinary or grievance meeting.
The government has also clarified that directors who pay themselves once a year are eligible to take advantage of the CJRS provided that they meet certain conditions (which includes notification to HMRC on an RTI submission on or before 19 March 2020, in relation to a payment of earnings in the 19/20 tax year).
It is also now clear that a new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership. The previous guidance issued last week provided that the relevant date for eligibility was 19 March 2020. The guidance still doesn’t offer definitive clarification as to whether the CJRS just applies to the sale of a business or whether it also applies to a service provision change. We see no reason for such a distinction and hope that clarification on this is provided in a further update.
The final key clarification is that normal rules for maternity and other forms of parental leave and pay apply. However, employers may need to calculate their employee’s average weekly earnings differently if their employees were furloughed and then started leave on or after 25 April 2020 for maternity pay, adoption pay, paternity pay, shared parental pay and parental bereavement pay purposes as we explained in our earlier blog (insert link). The government has also made it clear that employers can claim through the scheme for enhanced earnings related contractual pay for employees who qualify for either maternity pay, adoption pay, paternity pay, shared parental pay and parental bereavement pay.
The updated guidance can be found here.
Government releases seventh version of the guidance on the Coronavirus Job Retention Scheme (CJRS)
24 April 2020
Yesterday evening the government published its seventh version of the guidance on the CJRS. The government has helpfully clarified its position in relation to the agreement to be reached between the employer and employee. The guidance now states that collective agreement between an employer and a trade union is acceptable for the purposes of making a claim under the CJRS. Changes to the employment contract should be agreed between the employer and employee and the employer should confirm in writing that the employee is being furloughed. However, the employee does not need to provide a written response. As stated in earlier versions of the guidance, a record of this communication must be kept for 5 years.
Despite these clarifications, the guidance remains in conflict with the Direction to HMRC as paragraph 6.7 of the Direction requires employees to agree to cease all work in writing. However, HMRC has now stated that employers should follow the CJRS guidance and that it will interpret the Direction in accordance with the guidance when dealing with applications for reimbursement.
The government has also clarified the eligibility criteria, including those for employees on fixed-term contracts.
The updated guidance can be found here.
Government issues sixth version of the guidance on the Coronavirus Job Retention Scheme (CJRS)
21 April 2020
The government issued a further version of the guidance on the CJRS yesterday (this is now the sixth version), however, there is nothing major to report.
The sixth version of the CJRS has moved the details of what employers will need to make a claim to the ‘Claim for wages through the CJRS’ page. This page can be accessed here.
Annual Leave and Furlough
20 April 2020
On Friday night the government provided some much anticipated clarity on the issue of taking annual leave whilst on furlough leave. The government has confirmed that it is possible to take annual leave whilst on furlough and that the employer must ‘top up’ the employees’ pay to 100%.
However, the government has made it clear that they are keeping the policy on holiday pay during furlough under review during this unprecedented time and it is therefore likely that this may change as the situation progresses.
This clarification has been provided for in the government’s guidance entitled ‘Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme and the Employee’s Guidance.
Government announced further updates to the Coronavirus Job Retention Scheme (CJRS)
20 April 2020
In keeping with tradition, the government made further updates to the CJRS on Friday evening (17 April). The main changes / clarifications to the scheme have been outlined below:
- The government has confirmed the extension to the CJRS in the updated guidance. The guidance now states that the CJRS is in place for 4 months starting from 1 March 2020. The Chancellor confirmed separately that it will keep the CJRS under review and may extend the scheme beyond 30 June, if necessary.
- The government has made it clear that HMRC will check claims made through the scheme. Payments may be withheld or need to be reimbursed in full to HMRC if the claim is found to be based on dishonest or inaccurate information or found to be fraudulent.
- HMRC has put in place an online portal for employees and the public to report suspected fraud in the CJRS.
- The government has confirmed that if employees were made redundant or stopped working for their employer on or after the 28 February 2020, they can be re-employed and put on furlough leave. This applies to employees who were made redundant or stopped working after 28 February even if they are not re-employed until after 19 March. However, an RTI submission notifying payment to HMRC in respect of that employee must have been made on or before 19 March 2020.
- Employees on fixed term contracts which ended, without extension or renewal, on or before 19 March 2020 will not qualify for the CJRS.
- The government has clarified that to be eligible for the grant employers must confirm in writing to their employee that they have been furloughed. Employers must retain a written record of this communication for five years. The employee does not have to provide a response but this aspect of the guidance appears to contradict the requirement under the Treasury Direction which requires written agreement between the employer and employee.
- If an employee started unpaid leave after 28 February 2020, they can be put on furlough leave instead. However, if an employee went on unpaid leave on or before 28 February they cannot be placed on furlough leave until the date on which it was agreed that they would return from unpaid leave.
The Employment team at Hugh James has been working closely with businesses during this time to help them navigate through the increasingly complicated employment implications of the pandemic and will continue to monitor developments coming out from Government.
Coronavirus Job Retention Scheme (CJRS) Online Portal now live
20 April 2020
The highly awaited CJRS online portal has also gone live today (20 April 2020) enabling employers to reclaim up to 80% of furloughed employees’ salaries. It can be accessed through the Government Gateway.
Government announces that the Coronavirus Job Retention Scheme (CJRS) is extended until the end of June
17 April 2020
The government has announced that the CJRS has been extended from 31 May 2020 until the end of June 2020.
This decision has undoubtedly been taken because businesses who may need to still make more than 100 employees redundant at the end of the CJRS period would have needed to commence collective consultation on 17 April to ensure compliance with the minimum 45 day collective redundancy rule.
Whether companies intended to make redundancies or not this will hopefully be welcome news to many employers who still have operations affected as a result of the Covid-19 pandemic.
Government publishes the fourth version of the Coronavirus Job Retention Scheme (CJRS) and issues a Direction to HMRC
16 April 2020
On 15 April 2020, the government issued its fourth version of the guidance relating to the CJRS along with a Direction to HMRC made under the Coronavirus Act 2020. We have summarised the key aspects of the amended guidance and Direction below.
The government has changed the qualifying date for when the employee has to have been on the employer’s payroll from 28 February to 19 March 2020 (provided that HMRC were also notified on a RTI submission on or before 19 March 2020).
The government has also confirmed that employees who were notified to HMRC on an RTI submission on or before 28 February and were made redundant or stopped working for the employer after that date, can also qualify for the CJRS in the event that the employer re-employs them and puts them on furlough leave even if they are re-employed after 19 March 2020.
These changes are presumably intended to allow a larger number of employees who had recently changed jobs to fall within the scope of the CJRS. However, there are some issues which may limit how many employees fall within the new rules:
- In respect of those employees who started new jobs after 28 February 2020 but were then dismissed as a result of the COVID-19 crisis, their new employer are still not able to re-employ and furlough them as they would not have been on the new employer’s payroll as of 28 February 2020.
- In respect of those employees who remain in new jobs started after 28 February 2020, their employers may still not be able to furlough them unless HMRC were notified that they were on the new employer’s payroll by means of an RTI submission made on or before 19 March 2020. As the RTI submission is typically made around the time of the payroll and many employers run their payroll towards the end of the month, many such employees will still fall outside the scheme.
Direction to HMRC
The government has also issued a Direction to HMRC. This Direction has been made using the powers conferred by the Coronavirus Act 2020 and is therefore likely to be a definitive document in determining how HMRC will operate the CJRS scheme. Key aspects of the Direction include:
- Confirmation that employees who were employed on or before 19 March 2020 are able to be furloughed provided that the employer has submitted the RTI by that date.
- The CJRS is not limited to employees who would have otherwise been made redundant. The government has made it clear that the CJRS applies to any employees who are placed on furlough leave ‘by reason of circumstances as a result of coronavirus or coronavirus disease’.
- The government has clarified the very narrow duties which furloughed directors are able to carry out. A director who is placed on furlough leave can only undertake work to fulfil a duty or other obligation which arises from an Act of Parliament relating to the filing of company’s accounts or provision of other information relating to the administration of the company.
- The government has now stated through the Direction that the employer and employee must have agreed in writing that the employee will cease all work in order to be able to claim under the CJRS, whereas the guidance previously required only written notification by the employer. However, agreement can be by email.
- The government has confirmed that the amount of salary that can be claimed under the CJRS must disregard anything which is not ‘regular salary or wages’. This means that any discretionary bonuses or payments, any conditional payments (whereby a threshold must be met) and any non-financial benefits must be disregarded.
- An employer can claim for earnings which it ‘reasonably expects to be paid’ to the employee. This seems to include deferred earnings which are deferred until the employer received payment under the CJRS.
Although the government has set out the above changes and clarifications to the CJRS, there remain areas where the Direction is silent or unclear. For example, the Direction is silent on the issue of annual leave. It is, therefore, possible that we will receive further guidance and / or an amended Direction from the government in due course.
Government announces third version of the Coronavirus Job Retention Scheme guidance for employers
15 April 2020
On the evening of 9 April 2020, in keeping with its habit of releasing further information just before the weekend, the government announced its third version of the Coronavirus Job Retention Scheme (CJRS) guidance for employers just before the long Easter weekend. The new guidance helpfully provides further clarity in relation to three main areas; sick pay, TUPE and work visas and how they work with furlough.
We have summarised the key changes below:
- The government has confirmed that employers are permitted to switch employees from sick pay to furlough leave (and vice versa) if they become unwell whilst on furlough. However, this should not be abused by employers and used as a means of topping up the amount of SSP payable for short term sickness absences. If an employer decides to furlough an employee who is already on sick leave, they should treat them in the same way as other furloughed employees and stop paying them SSP.
- The government has made it clear that short term illness and self-isolation should not be a consideration in deciding whether to furlough an employee. These employees should only be furloughed for business reasons.
- It has been clarified that employers can furlough employees who are shielding in line with public health guidance or off on long term sick leave. Employers can claim through the CJRS and the SSP rebate scheme for the same employee but employers cannot claim through both schemes for the same period of time.
- The government has confirmed that it is up to employers to decide whether to keep furloughed employees who become sick on furlough leave or whether to move them onto SSP. The requirement for the shielded employee to “otherwise be made redundant” has been removed in the updated guidance.
- Employees who have transferred to a new employer by virtue of the Transfer of Undertakings and Protection of Employment Regulations 2006 (TUPE) after 28 February 2020 are able to be furloughed. The previous guidance was silent in this regard. Similarly, where a group of companies have consolidated their payroll after 28 February, the updated guidance has confirmed that they remain eligible to furlough employees under the CJRS.
- The government has also confirmed that foreign nationals employed by UK companies are eligible to be furloughed and employees on all categories of visa can be furloughed. Grants under the CJRS are not counted as “access to public funds”.
- The government has clarified that the reclaimable employer National Insurance Contributions and employer pension contributions are based on the furlough salary and not the employees’ normal salary.
- In addition to not working for their employer whilst on furlough leave, the updated guidance clarifies that employees cannot work for organisations that are linked or associated with their employer.
- The third version of the guidance confirms that all of the grant received under the CJRS must be paid to employees in the form of money. It must not be used to pay for the provision of any benefits via a salary sacrifice scheme. Employers should therefore consider the implications of this for any salary sacrifice schemes they operate and consider whether any changes to them need to be made, particularly given that the coronavirus has been confirmed as counting as a “life event” for salary sacrifice purposes.
- Employees returning from a period of family or sick leave can be furloughed and the updated guidance confirms that their normal salary should be used to calculate their furloughed salary, not the pay they received whilst on statutory leave.
- Finally the guidance has confirmed that employers will need the following information in order to make a claim under the CJRS:
- employer PAYE reference number
- the number of employees being furloughed
- Names, National Insurance Numbers, Payroll / works numbers for the employees being furloughed
- Employer’s Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
- the claim period (start and end date)
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- employer’s bank account number and sort code details; and
- a contact name and telephone number
- Employers are also expected to calculate the amount that they are claiming.
- HMRC has reminded employers that it will retain the right to retrospectively audit all aspects of the claim.
- It appears that that the online system for employers to upload claims will be live from 20 April. Employers are therefore advised to ensure that they start collating the above information now so that they are ready to access the portal and claim from the earliest date.
The Employment team at Hugh James has been working closely with businesses during this time to help them navigate through the employment implications caused by the pandemic and will continue to monitor developments coming out from Government.
Updated: 6 April 2020
On 4 April, the government updated its guidance for employers on the Coronavirus Job Retention Scheme. The full guidance can be found here and we have summarised some of the main clarifications below:
- Employers must be enrolled for PAYE online (this can take up to 10 days) along with the prior conditions of having a PAYE scheme in place on or before 28 February and a UK bank account in order to be eligible for the scheme.
- Apprentices can be placed on furlough leave in the same way as other employees and they can continue train whilst furloughed. Employers must cover any shortfall to ensure that they pay their apprentices at least the Apprenticeship Minimum wage, National Living Wage or National Minimum Wage as appropriate for any time they spend training.
- Individuals can furlough their employees (such as nannies and cleaners) provided that they are paid through PAYE and they were on their payroll on or before 28 February.
- In the event of a company being taken under the management of an administrator, the administrator will be able the access the scheme. However, the government has made it clear that it would only expect an administrator to do so if there is a reasonable likelihood of rehiring the workers.
- Employers can place employees who are shielding in line with public health guidance (or need to stay at home with someone who is shielding) on furlough leave. However, employers are only able to do so if the employee is unable to work from home and the employer would otherwise have to make them redundant.
- Employees on fixed term contracts can be furloughed. Fixed term contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Employers will no longer be able to claim a grant for fixed term employees where the contract ends because it is not extended or renewed.
- Office holders (including company directors) can be placed on furlough leave. The duration of furlough leave and any ongoing payment during furlough leave will need to be agreed between the office holder and the party who operates PAYE on the income they receive. The furlough arrangements should be formally adopted as a decision of the company or Limited Liability Partnership (LLP) as appropriate.
- Salaried directors are permitted to undertake their statutory duties whilst on furlough leave; however, they must do no more than would reasonably be judged as necessary. This also applies to individuals who are directors of their own personal service company.
- Agency workers who are paid through PAYE are eligible to be furloughed, including where they are employed by umbrella companies.
- Limb (b) workers who are paid through PAYE can be placed on furlough leave. Those workers who pay tax on their training profits through Income Tax Self-Assessment may instead be eligible for the Self-Employed Income Support Scheme which was announced by the Chancellor on 26 March 2020.
- Employers / organisations can agree to find new work or volunteering opportunities for furloughed employees provided that this is in line with public health guidance.
- The normal rules for maternity and other forms of parental leave and pay apply to employees on such types of leave. Employers can claim through the scheme for enhanced earnings related contractual pay for employees who qualify for maternity pay, adoption pay, paternity pay or shared parental pay.
- Employers must confirm the decision to place an employee on furlough leave in writing. Employers must also keep a record of this written communication for five years.
- Employers should start their claims from the date the employees finish work and starts furlough leave, not from when the decision is made or when they send written confirmation of the employees’ furloughed status.
- The government will only pro-rata grants where employees are only furloughed for part of a pay period.
- Employers are able to claim for wages, past overtime, fees and compulsory commission payments. However, discretionary bonuses (including tips), discretionary commission payments and non-cash payments should be excluded.
- The reference salary used by employers should not include the cost of non-monetary benefits provided to employees including taxable Benefits in Kind and benefits provided through salary sacrifice schemes (including pension contributions).
- COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements provided the relevant employment contract is updated accordingly.
- The Apprenticeship Levy and Student Loans should continue to be paid as usual.
- Employees can be furloughed multiple times but each separate instance must be for a minimum period of three consecutive weeks.
- Employees retain the same rights at work including SSP, maternity and other parental rights, rights against unfair dismissal and redundancy payments.
- Grants cannot be used to substitute redundancy payments and HMRC has made it clear that they will continue to monitor businesses after the scheme has closed.
- Employees on furlough leave are permitted to work for another employer provided that their contract of employment enables them to do so.
- Payments received under the scheme must be included as income in the business’ calculation of its taxable profits for Income Tax and Corporation Tax purposes.
Although the further clarification provided by the government is to be welcomed, there is still doubt surrounding issues such as the interaction between furlough leave and annual leave, the full scope of duties salaried directors are able to carry out and the situation in relation to employees who TUPE transferred after 28 February.
The Employment team at Hugh James has been working closely with businesses during this time to help them navigate through the employment implications caused by the pandemic and will continue to monitor developments coming out from Government. For further advice on Coronavirus Covid-19 related employment queries please contact our dedicated Employment and HR Services team.
Published: 27 March 2020
On 26 March, the government published guidance for employers on the Coronavirus Job Retention Scheme. This guidance has been much anticipated following the announcement of the scheme on 20 March. The full guidance can be found here and we have summarised some of the key points to note below:
- The Scheme will be open for three months from 1 March 2020. The Scheme is expected to be up and running by the end of April.
- Employers can use the HMRC portal to claim 80% of furloughed employees’ usual monthly wage costs up to £2,500 a month plus the associated Employer National Insurance Contributions (NIC) and minimum automatic enrolment employer pension contributions.
- Furloughed employees will receive 80% of their salary less tax, employee pension contributions and employee NIC even if based on their usual working hours this would be below National Living Wage or National Minimum Wage.
- Employers can choose to top up an employee’s salary but they do not have to. If employers do choose to top up, they will not be able to claim Employer NIC and automatic enrolment contributions on the top up amount.
- For full time and part time salaried employees, their salary as of 28 February 2020 should be used to calculate the 80% contribution. Fees, commission and bonuses should not be included.
- If an employee’s pay varies and they have been employed for a full year prior to the claim, the employer should claim the higher of either the same month’s earning from the previous year or the average monthly earning from the 2019-20 tax year. If an employee’s pay varies and they have been employed for less than a year the employer can claim for an average of their monthly earnings since they started work. Once an employer has calculated the employee’s pay, they must also calculate the amount of Employer NIC and minimum automatic enrolment employer pension contributions they are entitled to claim.
- The Scheme is open to all UK employers that had created and started a PAYE payroll scheme by 28 February 2020. Employees hired after 28 February 2020 cannot be furloughed or claimed for under this Scheme. Employers can claim the grant in respect of employees who were made redundant since 28 February 2020 if they are rehired.
- The Scheme is available to employers across all sectors including businesses, charities, recruitment agencies (agency workers paid through PAYE) and public authorities. However, the government has made it clear that they do not expect the Scheme to be used by many public authorities as public funding is continuing and many public sector employees are continuing to provide essential public services or contribute to the response to the current crisis.
- To be eligible for the scheme, employees cannot undertake any work for or on behalf of the employer. Employees can take part in volunteer work or training provided it does not provide services or generate revenue for or on behalf of their employer. If employees are required to undertake training whilst they are on furlough leave they must be paid at least the National Minimum Wage or National Living Wage.
- The minimum amount of time for which an employee can be furloughed is 3 weeks. Employees are unable to be rotated on a weekly basis.
- Employees placed on unpaid leave after 28 February can be placed on furlough leave. However, employees placed on unpaid leave prior to this date cannot be furloughed.
- Employees who are on sick leave or who are self-isolating should get Statutory Sick Pay (SSP); however, they can be placed on furlough leave after this.
- Employees who are social distancing in line with public health guidance can be placed on furlough leave.
- Employees with more than one job can be furloughed for each job. The £2,500 cap will apply to each employer individually.
- Where an employer offers enhanced contractual family leave payments, they will be able to claim this as wage costs through the Scheme for employees who are currently on maternity / paternity / adoption leave etc.
- Employers should have discussions with their staff and make any changes to the employment contract by agreement. Furloughed employees will retain all of their rights under their contract of employment.
- Employers can only submit one claim every three weeks. To be able to claim, employers will need their ePAYE reference number, the number of employees being placed on furlough leave, the start date and end date of the claim period, the amount being claimed, their bank account and sort code, their contact name and phone number.
- HMRC is retaining the right to retrospectively audit all aspect of an employer’s claim under the Scheme.
- Once an employer’s claim has been received, HMRC will consider whether they are eligible for the grant and if so pay it via BACS payment to the employer’s UK bank account.
The Employment team at Hugh James has been working closely with businesses during this time to help them navigate through the employment implications caused by the pandemic and will continue to monitor developments coming out from Government.
Louise Price, Partner and Head of Employment
T: 029 2267 5610