By Nic Hart & Liam Hutton
Another week and another set of Guidance on the Coronavirus Job Retention Scheme has just been released today, April 15th 2020.
In addition, there has also just been a Treasury Direction released this afternoon (April 15th 2020).
UK Gov Updated Guidance
I will first deal with the 4th Guidance issued by the Government. Details on this as follows.
1.The first big point is the change of qualifying date of when the employee needed to be on the Payroll. This has changed from February 28th to March 19th.
From the Guidance– You must have:
- created and started a PAYE payroll scheme on or before 19 March 2020
- enrolled for PAYE online (NOTE that there is no longer the notice that this can take up to 10 days)
- a UK bank account
NOTE- Guidance also states for full or part time employees on a salary – If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim.
2.The Guidance states that claims will be made online and that all support available on GOV.UK and that HMRC should not be contacted unless “absolutely necessary.”
- Further guidance has been given re furloughing employees such as nannies and now in addition to paying the employee through PAYE the individual must have- sent HMRC an RTI submission notifying a payment in respect of the employee on or before 19 March 2020.
3. Employees you can claim for has been given further qualification as follows;
You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020. 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 and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.
- Employees that were made redundant can be re-employed and put on furlough leave even if they are not re-employed until after 19 March, as long as the employee was on the Employers payroll as at 28 February and had been notified to HMRC on an RTI submission on or before 28 February 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 28 February 2020.
- Employees on unpaid leave cannot be furloughed until until the date on which it was agreed they would return from unpaid leave.
4.There is more guidance on the mechanics of making a claim and this should be read in full. Main points are those with fewer than 100 furloughed employees will be asked to enter details of each employee, over 100 you will be asked to upload a file with this information. Employers are urged to keep employees informed as they cannot provide details of individual claims and are asked to ensure employees do not contact HMRC. Employers must retain all records and calculations in respect of claims.
The Treasury has also today issued a Direction to HMRC under powers conferred by the Coronavirus Act 2020, containing authority and instructions for making payments under the Coronavirus Job Retention Scheme. Amendments may still be possible but this could be the definitive guidance on the scheme.
The main points on this are as follows:
- employees who were employed on 19 March 2020 (previously 28 February 2020) are eligible for furlough, provided the employer had submitted real time information payroll data by that date (paras 3.2 and 5(a))
- the Scheme is not limited to those employees who would otherwise be made redundant. It applies to any who are furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease” (para 6.1(c)).
- Cl 6.2 An employee cannot work for a person connected with the employer or a person who otherwise works indirectly for the employer.
- Cl 6.5 No claim to CJRS may be made in respect of an unpaid sabbatical or other period of unpaid leave of an employee beginning before or after 19 March 2020 (whether agreed or otherwise arranged conditionally or unconditionally on, before or after that day.)
- a director who is furloughed can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of company’s accounts or provision of other information relating to the administration of the director’s company (para 6.6). This is a very narrow interpretation of directors’ duties.
- to claim furlough, the employer and employee must have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work (para 6.7). Please note – the guidance only required notification. The Direction from the Treasury requires written agreement. This may mean that many employees who have already been furloughed may not fall within the meaning of the Scheme.
- the amount of salary for the employee must disregard anything which is not “regular salary or wages”. That includes disregarding any performance related bonus or discretionary payments (including tips), any conditional payments (e.g. where a threshold must be met) and any non-financial benefits (paras 7.3 – 7.5).
- the employer cannot claim for any salary which is “conditional on any matter” (para 7.4(b)). This may exclude any salary payments which the parties have agreed are conditional on the Job Retention Scheme paying out.
- the employer can claim for earnings which it “reasonably expects to be paid” to the employee (para 8.1(a)) – that seems to include deferred earnings, deferred until the Scheme pays out (provided they are not conditional on the Scheme paying out).
- Cl 8.6 continues No claim under CJRS may include amounts of specified benefits payable or liable to be payable in respect of an employee (whether or not a claim to the relevant specified benefit is actually made) during the employee’s period of furlough and the gross amount of earnings falling for reimbursement as described in paragraph 8.2 must be correspondingly reduced.
Despite both Government guidance and Treasury Direction issued today we STILL have no answers regarding Annual Leave. HMRC customer service have been advising individuals to refer to ACAS or await further guidance. We remain waiting on this issue, but I still consider there is a risk that taking Annual Leave during Furlough Leave may break the minimum 3-week qualifying period.
For More Information
Please contact NIc Hart or Liam Hutton, or another member of the Duane Morris London Office.