By Nic Hart & Liam Hutton
20.04.2020
Last night the Government helpfully delivered Round 3 of the Guidance for employers (and employees) on the Coronavirus Job Retention Scheme.
Whilst it clarifies some areas and introduces new points, i.e. TUPE it remains silent on the issue of Annual Leave. Please find below an overview of the new Guidance. It is worth reading in its entirety and I attach a copy of the same with the new areas noted in red and highlighted.
The first main point of clarification is that the CJRS is NOT intended for short-term sickness absence;
The Coronavirus Job Retention Scheme is not intended for short-term absences from work due to sickness, and there is a 3 week minimum furlough period.
However, employers are free to move employees from sick leave to furlough leave and vice versa and this is up to the employer to decide whether to move an employee onto SSP or keep them on furlough.
There is more guidance on the issue of Shielding employees. This new guidance reverts to the previous definition regarding Shielding Employees;
Employees who are unable to work because they are shielding in line with public health guidance (or need to stay home with someone who is shielding) can be furloughed.
The statement “if they are unable to work from home and you would otherwise have to make them redundant” has been removed and the new Guidance makes it clear that shielding employees can be furloughed.
Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. It is up to employers to decide whether to furlough these employees. You can claim back from both the Coronavirus Job Retention Scheme and the SSP rebate scheme for the same employee but not for the same period of time.
There is new guidance for Contractors with public sector engagements in scope of IR35 off -pay working rules. Please refer to the notes for full details.
It has also been confirmed that those with certain work visas will not be in breach of their visa conditions if they receive funds through the scheme;
Grants under the scheme are not counted as ‘access to public funds’ and you can furlough employees on all categories of visa.
Although brief, there has finally been Guidance regarding TUPE;
A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 28th February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.
Some other points of clarification;
- Group companies with multiple payroll schemes who transferred employees into a consolidated scheme after February 28th 2020 are still eligible to furlough those employees.
- The amounts of National Insurance and pension elements that are reclaimable will be on the furlough salary, not normal salary.
- All grant received to cover furlough pay must be paid to the employee in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.
- Confirmation that those full or part time employees returning from statutory leave after February 28 2020 will have their pay- calculated against their salary, before tax, not the pay they received whilst on statutory leave.
- There is new criteria required in the information to make a claim, namely;
- National Insurance Numbers for the employees you want to furlough
- Names of the employees you want to furlough
- Payroll/works number for the employees you want to furlough
- your Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
Further, if you use a PAYE agent they will be able to make a claim on your behalf but if you use a file only agent then they will not be authorised to claim and the individual will have to make the claim.
- The Guidance makes clear that employers cannot add any administration charges, fees or costs in connection with employment such that it reduces employees’ wages below 80% of their reference pay (up to the monthly cap of £2500).
- There has been an extension of the definition of an organisation such that employees cannot work for organisations that are linked to the employer, as well as not working for the employer, when on furlough leave.
Lastly it is confirmed that;
Domestic staff are subject to Income Tax and National Insurance Contributions on their wages as normal. Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme.
Whilst the further clarity in some areas is welcomed there remains outstanding concerns, such as Annual Leave, which we hope is addressed soon. As always, please do not hesitate to contact me if you have any queries about this new Guidance or any other aspect of the scheme.
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
For More Information
Please contact Nic Hart or Liam Hutton, or another member of the Duane Morris London Office.