COVID-19 and the Job Retention Scheme
Overnight on the 4th April 2020 HMRC updated its guidance on the Coronavirus Job Retention Scheme (CJRS) which you can see here.
What are your options?
We strongly recommend that you read the whole guidance but we have summarised some of the main updates as well as some of the questions that remain outstanding below. Please note this note should be viewed as guidance only and is not a substitute for seeking specific advice. The position remains dynamic and subject to change.
- The guidance now states that, as well as having started a PAYE payroll scheme on or before 28 February 2020 and having a UK bank account, the employer seeking to claim must be enrolled for PAYE online (which can take up to 10 days).
- Apprentices can be furloughed in the same way as other employees and can continue to train whilst furloughed. However, they must be paid at least Apprenticeship Minimum Wage, NLW or NMW as appropriate for time spent training.
- Individual employers can furlough employees such as nannies provided they pay through PAYE and were on the payroll on, or before, 28 February 2020.
- Employees can start a new job when on furlough. This was not prohibited in the earlier guidance but it is now expressly permitted. The right to do so remains subject to the employment contract but an employer could waive this.
- Company directors can be furloughed. They can carry out their statutory duties but not do any other ‘work’.
- Employees can be furloughed multiple times. Specifically they can be furloughed, brought back to work, then furloughed again. Of course, each furlough period needs to be at least three consecutive weeks.
- An employer can reclaim 80% of compulsory (we think this means contractual) commission back from HMRC, as well as basic salary and past overtime. Discretionary bonus, tips and commission payments and non-cash payments should be excluded.
- The 80% does not include non-monetary benefits (e.g. the value of a car or health insurance).
- Benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the CJRS. Normally an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
- Employers must notify employees of their furlough status in writing (the previous guidance did not require it be in writing) and keep the record of that written notification for five years.
- Claims should be started from the date the employee finishes work and starts furlough, not when the decision is made, or when they are written to confirming their furlough status.
- Grants under the CJRS cannot be used to substitute redundancy payments.
Unfortunately many areas still remain unclear. Most notably:-
- Can employees take annual leave on furlough? If so, what should they be paid?
- Are employees who TUPE into a business after 28 February covered?
- Some of the wording regarding what you can reclaim in regards to compulsory commission and overtime appears potentially contradictory.
If you have any queries, please fill in the enquiry form or contact a member of our Employment team.