Yesterday HMRC amended its Coronavirus Job Retention Scheme (CJRS) guidance again, closely followed by the Treasury issuing ‘directions’ to HMRC about the scheme pursuant to the Coronavirus Act 2020, therefore giving it judicial backing. However, rather than clarifying matters, it has raised more questions than it has answered. Neither covers the question of holiday pay.
However, it does make clear that the purpose of the scheme is ‘to provide for payments to be made to employers on a claim made in respect of them incurring costs of employment in respect of furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from Coronavirus and Coronavirus disease.’ This lays to rest concerns that it is only in respect of employees who would otherwise be made redundant or where the workplace is closed.
Below are the important changes:
To qualify an employer must have a pay as you earn (“PAYE”) scheme registered on HMRC’s real time information system for PAYE on 19 March 2020 which is a change from 28 February 2020.
Employee Qualification Date
- employees that were on your PAYE payroll on or before 19 March 2020 (changed from 28 February 2020) and
- which were notified to HMRC on an RTI (Real Time Information) submission on or before 19 March 2020 and
- an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020
Although some commentators have announced this as now allowing those employed between 28 February 2020 and 19 March 2020 to be furloughed we do not believe that in practical terms it will make this difference. The reason for this is that for an RTI submission notifying payment to have been made in respect of a new employee, their pay day must have been very early in March, and most pay days are at the end of the month. We therefore advise caution in trying to furlough anyone who joined your employment between 28 February and 19 March 2020 unless you have already notified HMRC of a payment to them.
You must have been instructed employees to cease working because of the coronavirus and they must have ceased work for at least 21 days and the Treasury direction says the employee must have agreed in writing to be furloughed. This can be an email. This differs from previous HMRC guidance which said the worker had to be notified in writing. Therefore if you have simply sent your employees a letter and they have not responded in writing you must ensure that they do so now, including where you have exercised a lay off clause.
Re-employing Former Employees
Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that can also qualify for the scheme if the employer re-employs them and puts them on furlough. However, the guidance contradicts itself because under the heading ‘Employees you can claim for’ it refers only to those who stopped working between 28 February and 19 March 2020 but under the heading ‘If you made employees redundant or they stopped working for you after 28 February’ it makes no reference to them stopping working prior to 19 March but says you can furlough them ‘even if they re-employed them after 19 March’. Therefore we advise caution in re-employing anyone who left after 19 March and furloughing them until this is clarified.
However, if an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, their former employer/s cannot re-employ them and put them on furlough and claim for their wages through the scheme.
The revised HMRC guidance makes it clear that not only must a furloughed worker not work for someone else connected or associated with their employer but they must not work indirectly for their employer either.
Directors can fulfil a duty or other obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company. This is fairly narrow.
Unpaid sabbaticals and other unpaid leave
If an employee was on an unpaid sabbatical or other period of unpaid leave on 28 February 2020 they cannot be furloughed until expiry of the period of leave agreed or contemplated at the start. If there was no agreed period because it was subject to something happening or completion of a specific event, then the sabbatical must end first on that date or the happening of that event before they can be furloughed.
What an employer can claim
- The employer cannot claim for any salary which is “conditional on any matter” and this may possibly cause a problem where the employer and worker have agreed that payment to the worker is conditional on the Job Retention Scheme paying out.
- The employer can claim for earnings which “is paid or it reasonably expects to be paid” to the employee, which suggests earnings which are deferred can be claimed for in full.
Making a Claim
For fewer than 100 furloughed staff you will be asked to enter details of each employee you are claiming for directly into the system If you have 100 or more furloughed staff you will be asked to upload a file with the information rather than input it directly into the system. HMRC will accept the following file types: .xls .xlsx .csv .ods