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IMPORTANT UPDATES – 17 APRIL 2020
- PUBLISHED GUIDANCE DOCUMENT TO MAKE A CLAIM
At 7:06pm on 17 April 2020, the government published a guide explaining the information that employers need to provide to HMRC to make a claim through the Coronavirus Job Retention Scheme (‘CJRS’). It also describes the processes involved.
IMPORTANT – if you are a an employer making a claim, you need to follow the processes explained in the guidance page which can be accessed by clicking here:
- FURLOUGH SCHEME EXTENDED
The Chancellor, Rishi Sunak, has announced that the CJRS has been extended by one month. The furlough scheme was due to end on 31 May 2020 but will now run until the end of June to continue to protect jobs across the country.
One of the reasons behind today’s announcement may be that many large businesses would have been due to start the 45-day collective consultation period today in order to comply with the rules on collective redundancy if they had been planning to make mass redundancies following the end of the furlough scheme on the original end date of 31 May 2020.
The scheme will continue to be monitored by the government to enable people to return to work as soon as it is safe to do so.
FURTHER UPDATES, AS AT 15 APRIL 2020 CAN BE FOUND BELOW:
We appreciate it may be hard to keep on top of the varying updates regarding furlough and timescales. Below is a detailed note, provided by our employment department which seeks to clarify the current position, as at 15 April 2020.
The information is based on current guidance produced by the UK Government, the Direction (as defined below) and from various announcements, as such the information may be subject to change.
Note: this this update does not constitute legal advice and operators are advised to seek specific advice in relation to their business.
As well as updating published guidance regarding the Coronavirus Job Retention Scheme (“CJRS”), HM Treasury has issued a direction to HMRC outlining the terms of the CJRS and the infrastructure and application of that scheme (“the Direction”). This Direction will take precedent over Govt guidance in deciding disputes or misunderstandings. Whilst this Direction is likely to be definitive, there is no prohibition on amendments being made going forwards or further directions to HMRC.
- The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction (the “Direction”) is available by clicking here.
- The full updated Govt guidance is available by clicking here.
- Further publications and resources provided by Backhouse Jones can be found by accessing our COVID-19: Resource Hub or by clicking here.
Regarding furlough, here are the key points to consider.
1. The PAYE System
2. Directors
3. TUPE
4. Payroll Consolidation
5. After you’ve claimed
6. Tax treatment of grants awarded under CJRS
The term “furlough” has not been commonly used within UK employment but was introduced by the Chancellor of the Exchequer when announcing the intention to implement the CJRS. It means that an employee is granted a leave of absence from work whilst maintaining the employment relationship. In its current context it has been utilised by the government to prevent mass redundancies and maintain employment so that business can continue after the Coronavirus pandemic.
Under the CJRS, employees can be furloughed, and employers can apply for a grant to cover 80% of the monthly wage costs for furloughed employees, up to a maximum of £2,500 plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions.
In order to make use of this furlough, the Direction appears to require that the employer and employee agree in writing that the employee will cease all work for that employer whilst they are furloughed.
IMPORTANT: If you have furloughed staff before now, you should check how those employees have been furloughed. If there is no written agreement in place as required by the Direction, they may not fall within the scope of the Direction and CJRS, and consequently employers may not be able to claim back those wages.
The amount of salary claimed for the furloughed employee must disregard anything which is not “regular salary or wages” according to the Direction. This includes disregarding performance related bonuses or discretionary payments (including tips), any conditional payments and any non-financial benefits. Further to this, the employer furloughing employees cannot claim for any salary which is “conditional on any matter.” There is argument to suggest that this excludes any salary payments which the parties have agreed are conditional on the CJRS paying out to the employer.
The Employer can claim for earnings which it “reasonably expects to be paid” to the employee according to the Direction. This would seem to include any deferred earnings which have been put back until the CJRS pays back claimed wages to the employer (provided that those earnings are not conditional on the CJRS paying out).