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Published 20 abril 2020
The Coronavirus Job Retention Scheme (CJRS) online portal has gone live this morning. HMRC has said that it expects payments to be made within 6 working days of a claim.
At the end of last week the Government announced that the CJRS will be extended until the end of June. On Friday evening they also issued yet another update of the Employer and Employee Guidance. (version 5, 17 April) as well as two further sets of guidance:
This morning the Government has published version 6 of the Employer Guidance, although the only change is that it has moved some of the information about making a claim to a separate guide.
As set out in our previous alert, last Wednesday (15 April) the Government also issued a Treasury Direction which was said to be the legal framework for the CJRS. Although the Direction largely mirrors the Guidance, there are unfortunately some important contradictions between the two documents.
In this briefing we summarise the latest developments and attempt to reconcile all the different documents.
The most significant issue raised by the Direction is that it states an employer can only validly furlough an employee (and hence claim their recoverable wage costs under the Scheme) where the cessation of work is agreed in advance and in writing between employer and employee. Many employers have complained this requirement was only announced on 15 April and was contrary to the previously published guidance, which said only that the employer must “confirm” the furlough in writing to the employee.
The updated employer Guidance (issued on 17 April) tries to address this concern and states that for the purposes of obtaining the grant it is not necessary to obtain the express written consent of employees. It states, “To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. 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”.
The new wording in the Guidance is helpful for employers but unfortunately as yet the Direction has not been changed to reflect the Guidance wording. As the Direction technically trumps the guidance, employers are in principle still left in an uncertain position.
Many employers will already have asked that employees confirm their agreement in writing and so will have complied with this provision. However, there are also many employers who did not attempt to seek the agreement of furloughed employees, on the basis that it would continue to pay the relevant employees their full wages and/ or because they were relying on a “lay off” clause. Others may not have formal written agreement that the employees will “cease all work” due to the practical difficulties of obtaining written consent. For those that have not yet got employees’ express consent to cease working, the safest approach would be to continue to seek this, so far as possible. If you have not yet received express consent from all employees this should not stop you from applying under the Scheme but you should state that you are doing so in reliance on the Guidance in place at the time you furloughed employees.
Another area of conflict between the Guidance and Direction is backdating claims. The Guidance allows for this. The Direction does not because it refers to an agreement that the employee will cease to work. Again we suggest employers should flag an backdated claim in the application in reliance on the Guidance.
As mentioned in our previous alert the key payroll eligibility date for the CJRS has been changed. The revised Guidance states that an employer can claim for the wage costs of furloughed employees who were on the employer’s payroll on or before 19 March. Significantly, however, in order to qualify employers must have made a Real Time Information (RTI) submission notifying HMRC of a payment in respect of the employee on or before 19 March. RTI is a means through which information about tax and other deductions under the PAYE system is transmitted to HMRC by the employer every time an employee is paid.
The change in date will be of benefit to some employees. In particular it is most likely to benefit those who are paid weekly, and so who may have had an RTI submission made for them between 28 February and 19 March. However, many people who started employment in March and are paid monthly so may still miss out. This will be the case if they not paid until the end of the month.
Of more concern to employers is the fact that the additional requirement of the existence of an RTI submission may mean that some employees who were put onto payroll in late February 2020 may now no longer qualify for the Scheme. There may be no RTI submission if their pay was not processed for the first time until after the cut-off of 19 March. This could have a detrimental financial impact for employers who may have already furloughed such employees on the basis of previous versions of the guidance.
It had appeared from recent versions of the Guidance that the position on sick pay and furlough had been resolved, and that it was open to employers to furlough employees who were already on sick leave. The most recent Guidance indicates that the Scheme was not intended for employees on short-term sickness absence, but nonetheless goes on to state that “if, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees.” Equally under the Guidance, an employer could also choose whether to continue to furlough employees who fell sick whilst furloughed, rather than pay Statutory Sick Pay (SSP).
Unfortunately, the Treasury Direction seems to have introduced uncertainty again and suggests that where SSP is payable furlough cannot now begin until the original SSP period has ended. If an employee’s fit note ends or s/he does not self-certificate it appears s/he would then be eligible to be furloughed.
One further development is that the Government has now extended the SSP regulations so that people who are in extremely vulnerable groups and have been notified to shield are entitled to SSP from 15 April. However, the explanatory memorandum to the shielding /SSP Regulations state that the access to SSP is intended as a “safety net for [such] individuals, in cases where their employer chooses not to furlough them under the Coronavirus Job Retention Scheme and does not have other suitable policies in place (e.g. the ability to work from home, or the provision of special leave)”. So it appears that the intention, at least in relation to shielding employees, is that they can be furloughed, regardless of their eligibility for SSP.
For the first time the Guidance now includes reference to annual leave and holiday pay. This is contained in the Employee guidance and is not, so far, replicated in the Employer Guidance.
The main points which have been confirmed are:
There is no indication at the moment that the Direction will be changed. That said, as we all know, this is a constantly evolving situation. The inconsistencies have been highlighted to HMRC and we hope that the Government will address them.
Click here to access the Treasury Direction:
+44 (0) 161 934 3179
London - Walbrook
+44 (0)20 7894 6701
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