We have been wanting to update you over the previous several days, but each update became out of date before it could be sent!  We set out the history of the changes over the last 10 days below, with the most recent first.

The key issues where we still do not have clarity are a) whether an employer can require employees to take holiday during furlough leave, b) whether there has to be written agreement from the employee agreeing not to work before that employee can be claimed for under the scheme, c) what might constitute work thereby invalidating furlough leave e.g. acting as an employee representative, and d) the position of sick/shielding employees.  Many of these have been raised by the Employment Lawyers Association with BEIS (Department for Business, Energy & Industrial Strategy) for clarification, and as soon as we have any further information we will let you know. 

23 April 2020 - Government guidance entitled ‘Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme’ (Employer guidance on the CJRS) updated

The key updates are as follows:

  • Employers can claim for employees who were made redundant or ‘stopped working’ after 19 March 2020.  The previous version of the guidance gave the impression that this was not possible.  Clarification has been provided on the position of fixed-term employees. 
  • A collective agreement reached between an employer and a trade union is acceptable evidence that an employee has agreed to be furloughed.

20 April 2020 - HMRC portal for the Coronavirus Job Retention Scheme (CJRS) goes live

The portal can be accessed through the Government Gateway.  Guidance has been published on how to do so.  It would appear that the portal is working well and employers are able to access it. 

17 April 2020 - Government confirms that the Coronavirus Job Retention Scheme (CJRS) is extended to 30 June 2020

Last Friday the government announced the extension of the CJRS to the end of June 2020 in light of its extension of social distancing requirements until 7 May 2020 the previous day.  The end date was previously 31 May 2020. 

It is understood that this may have been in response to calls for the position on the end date of the CJRS to be clarified; organisations needing to make more than 100 employees redundant at the end of the CJRS period would have needed to start the 45 day collective consultation period on 18 April.  The extra month gives some breathing space to employers who are having to consider what happens when the CJRS ends.

17 April 2020 –Employer guidance on the CJRS updated

The key updates were as follows:

  • There is a new section on fraud which states that HMRC will check claims made through the scheme, and payments may be withheld or need to be repaid in full to HMRC if the claim is based on dishonest or inaccurate information or found to be fraudulent.  An online portal has been put in place for employees and the public to report suspected fraud in the CJRS.
  • On fixed term contracts, further detail has been provided to say that there is no minimum period which must be left to run on a fixed term contract to enable it to be renewed or extended, but it must not have ended. Where a fixed term employee’s contract ends because it is not extended or renewed before its natural conclusion, employers will no longer be able claim a grant for that fixed term employee once the contract ends.
  • As far as keeping a record of any agreement with an employee to be furloughed is concerned, the update says that employers must confirm in writing to their employee 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 under the CJRS. There needs to be a written record, but the employee does not have to provide a written response.   NB – this is different to what is said in the Direction of 15 April 2020 (see below). 

17 April 2020 – Government guidance entitled ‘Check if your employer can use the Coronavirus Job Retention Scheme’ (Employee guidance on the CJRS) gives information on holiday taken during furlough leave

This is the first time that government guidance has been given on this issue.  The key points are as follows:

  • Employees will continue to accrue leave as per your employment contract.
  • Employees can take holiday whilst on furlough.  This must be paid at the employee’s normal rate of pay, rather than the reduced 80% furlough rate.
  • Employers will have the flexibility to restrict when leave can be taken if there is a business need, the implication being that if they cannot afford to top up the 80% pay to 100% then they can require that no holiday is taken during furlough.  The guidance states that this applies for both the furlough period and the recovery period, although no definition is provided for what ‘recovery period’ might mean.
  • If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If employees usually take the bank holiday as leave then the employer would either have to top up the employee’s pay to their usual holiday pay or give the employee a day of holiday in lieu.
  • The final point made on the issue is that during this unprecedented time the government is keeping the policy on holiday pay during furlough under review.
  • Nothing is said about employers being able to require employees to take leave during the furlough period as is provided for in Regulation 15 of the Working Time Regulations 1998. 

17 April 2020 – new guidance published by the government entitled ‘Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme’

This guidance contains the same information on holiday as is set out in the Employee guidance on the CJRS.  The government has also moved the guidance on the practicalities of how to calculate what is paid to an employee from the Employer guidance on the CJRS to this document, giving more detail.  The extra detail is as follows:

  • It sets out that the following should be included in the calculation for furlough pay - regular wages you pay to employees, non-discretionary overtime, non-discretionary fees, non-discretionary commission payments and piece rate payments.
  • It sets out that the following should not be included in the calculation - payments made at the discretion of the employer or a client, including tips, discretionary bonuses, discretionary commission payments, non-cash payments, non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay.
  • It gives the option of using an on-line calculator
  • It sets out a step by step process for calculating 80% of salary for fixed rate full or part time employees on a salary, employees whose pay varies and were employed from 6 April 2019 and employees whose pay varies and who started employment after 6 April 2019.
  • It sets out how to calculate National Insurance and pension contributions.

16 April 2020 – the Statutory Sick Pay (General) (Coronavirus Amendment) (No. 3) Regulations 2020 came into force

These Regulations provide that a person is deemed to be incapable of work if they are unable to work because they fall within the extremely vulnerable category and have been advised to shield.  They are therefore eligible for Statutory Sick Pay, but possibly only from 16 April 2020 onwards when this amendment came into force. 

15 April 2020 - Government publishes Direction from the Treasury on the CJRS

The CJRS is not set out in a statute or Regulations.  Until 15 April the only information we had about it was contained in the Employer guidance on the CJRS and the Employee guidance on the CJRS, as referred to above.

On 15 April a Direction was issued by the Treasury to HMRC, pursuant to powers conferred by sections 71 and 76 of the Coronavirus Act 2020.  The Direction is an exercise of ministerial authority conferred by an Act of Parliament and is legislative in its nature.  It therefore should take precedence over the Employer Guidance on the CJRS and the Employee Guidance on the CJRS.

The key points in the Direction are as follows:

  • Employers can only claim a grant under the CJRS in respect of an employee who was on the payroll on 19 March 2020 (previously 28 February 2020) and who was notified to HMRC on a real time information system (RTI) submission on or before 19 March 2020. 
  • An employee qualifies for the scheme if furlough occurs ‘by reason of circumstances arising as a result of coronavirus or coronavirus disease.’  There is no reference at all to a requirement that the alternative to furlough is redundancy or lay-off (as was referred to at the very start of the CJRS on 20 March). 
  • The definition of a ‘furloughed employee’ is contingent on there being an instruction by the employer to the employee to cease all work in relation to their employment.  The Direction says that an employee will have been instructed by the employer to cease all work in relation to their employment only if the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment. 
  • The above requirement has led to many employers chasing all employees who have not yet given written consent to their ceasing from work.  The wording of the Direction is different to the Employer Guidance on the CJRS (see above) but as the Directive has more legal weight than the Guidance, employers should continue to seek to ensure that they have written confirmation from employees that they have ceased work.  At least there is no requirement in the Directive that the agreement in writing has to pre-date the period when the furlough began. 
  • On 23 April 2020, as reported by Daniel Barnett, some comfort was given to employers who do not have written agreement from their employees, in that it was clarified that HMRC will not deny an employer the ability to reclaim funds simply on the basis the employer had not obtained written agreement from the employee to cease all work for the employer.  It would appear therefore that the Employer Guidance on this issue will be followed by HMRC when processing applications.

Cater Leydon Millard

24 April 2020

This FAQ document provides general guidance only and expert advice should be sought in relation to any particular circumstances.