Following our articles regarding the Coronavirus Job Retention Scheme (“the Scheme”) posted over the past few weeks, further information has been released over the past few days. We have summarised these updates below.
The Treasury has now published the full rules for the Coronavirus Job Retention Scheme (Furlough Scheme). They take the form of a Direction to HMRC. The full version is available here
Which employees are covered by the Scheme?
- Previously employees had to be on their employer’s payroll on 28th February 2020 in order to qualify for the Scheme, however you can now claim for furloughed employees that were on your PAYE payroll on or before 19th March 2020 and which were notified to HMRC on an RTI submission on or before 19th March 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19th March 2020.
- Guidance issued by the Treasury on Wednesday now states that the Scheme is not limited to those employees who would have otherwise been made redundant. The Scheme now also applies to any employees who are furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease.” This new guidance certainly widens the scope for employers considerably but it remains to be seen how this will be interpreted.
- The Direction states that in order to claim reimbursement under the Scheme, the employer and employee must have agreed in writing to be placed on furlough leave and to cease all work. This is significant as previous Government guidance only required the employer to notify the employee rather than to seek agreement. In anticipation of this, we have been advising clients to treat putting employees on furlough leave as a change to terms and conditions exercise and to seek agreement, including their agreement to cease all work in any event. If you have only notified your employees that they will be placed on furlough leave and have not agreed in writing (via email is fine) then we suggest that their agreement is sought as soon as possible. We can provide you with a draft letter if required.
- Previously guidance stated that employees must be furloughed for a minimum period of three weeks in order to meet the requirements of the Scheme. The Direction states that this three-week period means 21 calendar days and not three working weeks.
- The Direction has clarified that an employee who was already on unpaid leave on 28th February 2020 cannot be furloughed until their period of unpaid leave has come to an end.
- The Direction also states that the employer cannot claim for any salary which is conditional on any matter. This may therefore exclude any salary payments which the parties have agreed are conditional on the Job Retention Scheme paying out – we await further information on this point.
When will the online portal be open?
HMRC have stated that they hope the online portal will be open on 20th April 2020, with the first reimbursements made around 30th April 2020.
Practically, if you are applying for the grant, we recommend that you start to collate the information that you will need now, ready to submit your application on 20th April to receive your grant at the earliest possible date.
The key things that employers will need to make a claim are:
- Your PAYE reference number, UTR and Company number (if applicable)
- The number of employees being furloughed
- The claim period (start and end date)
- Amount claimed
- Your bank account number and sort code
- Your contact name and your phone number
We understand that in most cases, Payroll agents are unable to file a claim on behalf of an employer. Unless you can confirm that your agent can definitely do so, you will need to be registered for PAYE Online through the Government Gateway.
What duties can directors undertake whilst furloughed?
Previously, Government guidance stated that although company directors must not undertake any work for the company whilst on furlough leave, they could carry out duties that were reasonably necessary to fulfil the statutory obligations they owe to the company. However, it was unclear what the meaning of “statutory obligations” actually entailed.
The Treasury have now clarified the situation by stating that a director on furlough leave can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of company’s accounts or provision of other information relating to the administration of the director’s company.
Will employees who have transferred under TUPE to a new employer after 19th March 2020 be eligible for furlough leave?
Yes, the position recorded in the earlier guidance issued late last week confirmed that the new employer will be eligible to claim under the Scheme for employees who transferred to it after 28th February 2020. However, the upshot of these provisions is that on the face of the Direction, employees only qualify under the Scheme where the transfer to the new employer takes place after 19th March 2020. Naturally this creates an issue where employees transferred between 28th February and 19th March. A further issue arises where their RTI submission may not have been notified to HMRC before 19th March 2020. This could mean that neither the previous employer or the new employer would meet the eligibility conditions.
Can an employee work for an associated employer during furlough leave?
No, an employee cannot carry out any work for the employer seeking the reimbursement during furlough leave, or carry out any work for an associated business/ another company in the company group whilst furloughed.
Can an employer claim back pension contributions and national insurance contributions under the Scheme?
Government guidance now confirms that when claiming up to the lower of 80% of an employee’s normal monthly salary or the cap of £2,500 per employee, the reimbursement will also cover the associated employer national insurance contributions and the minimum auto-enrolment employer pension contributions (3% on qualifying earnings) on the subsidized furlough pay. These payments can be reclaimed in addition to the reimbursement limit.
Can annual leave be taken during furlough leave?
Purely from a Working Time Regulations 1998 perspective, it is likely that workers can take annual leave during furlough. However, one particular aspect that currently remains unclear is whether furloughed employees can take annual leave (including bank holidays) without it impacting the reimbursement that the employer claims through the Scheme.
HMRC Customer Support tweeted on their Twitter page recently that it is possible to take annual leave whilst on furlough leave and that it must be paid at full pay. However, this has not been confirmed officially by the Government and we therefore hope that this is clarified shortly.
In the meantime, we are suggesting that the most cautious approach would be not to direct employees to take holidays before the accrual of the minimum 3-week period of furlough (including bank holidays) and until we have more guidance on this point.
As we understand, guidance will be issued regarding the online portal before it goes live – as soon as such guidance has been released, we will endeavour to post an update on our website and LinkedIn page.
Many employers have already taken advantage of our retainer service to ensure that they can satisfy their obligations to their employees, whilst ensuring that they meet the criteria of the Scheme for a reasonable fixed monthly fee. Please do not hesitate to contact us if you need help – email@example.com