Coronavirus Job Retention Scheme Update - Updated Guidance and Treasury 'Direction'

Thank you to Michael Bauer of Cumbria Employment Solicitors for providing the following update:

The government has published further details of the Coronavirus Job Retention Scheme which can be found at:

• Employer Guidance – https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
• Employee Guidance – https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

However, of more significance, the Treasury has also issued a “Direction” pursuant to sections 71 and 76 Coronavirus Act and it seems that it will be this Direction that will formally govern the operation of the scheme. The Direction can be found at:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf.

I provide some summary guidance below – primarily focusing on a few key changes that have been announced. The change at point 4 is of particular significance. This is intended as guidance only and is not a substitute for taking proper legal advice or consulting the full terms of the scheme and the regularly changing guidance.

Key Changes

1. The scheme is open to all UK employers that had a PAYE scheme in place on 19 March 2020 (previously 28 February 2020).

2. 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 2020) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.

3. The scheme is not limited to those employees who would otherwise be made redundant.  Subject to the other requirements, it applies to any who are furloughed "by reason of circumstances as a result of coronavirus or coronavirus disease."

4. To claim furlough, the employer and employee must have agreed in writing that the employee will cease all work (paragraph 6.7 of the Direction). The previous guidance only required that the employer "notify" the employee. However, the Direction requires written agreement.  Therefore, if the required agreement that the employee will cease work is not obtained in writing then this may well mean that the employee will not fall within the scheme. Therefore, appropriate written agreement should be obtained as soon as possible. The guidance does confirm that agreement by email is acceptable.

5. An employed director who is furloughed can only undertake work to fulfil a duty or other obligation arising from his or her statutory duties relating to the filing of company accounts or provision of other information relating to the administration of the director's company.  This is a very narrow interpretation of directors' duties.

6. The amount of salary for the employee must disregard anything which is not "regular salary or wages". This requires the disregarding any performance related bonus or discretionary payments, any conditional payments and any non-financial benefits.

7. The employer can claim for earnings which it "reasonably expects to be paid" to the employee. Whilst it is not completely clear, this could potentially include earnings that have been delayed until the scheme pays out (as long as this does not fall foul of point 7 above).

8. The Direction is completely silent on annual leave and whether requiring staff to take leave while on furlough breaks furlough. Informal guidance has been given suggesting that requiring staff to take annual leave while on furlough does not break furlough but that any such period must be paid at the rate normal remuneration and not the 80% rate. However, official guidance has not been given.

I suggest you review the relevant guidance and the Direction and the steps you have taken to date to ensure that you consider you are compliant with the relevant requirements.

Please note that this information does not, and is not intended to, amount to legal advice to any person on a specific case or matter. Every reasonable effort is made to make the information accurate and up to date but no responsibility for its accuracy and correctness or for any consequences of relying on it is assumed by us.

How to Claim

HMRC has provided additional information about the claim process as follows:

• the online claim service will be launched on GOV.UK on 20‌‌ April 2020.
• the only way to make a claim is online. Support will be available on GOV.UK, including help with calculating the amount you can claim.
• you can make the claim yourself even if you usually use an agent.
• claims will be paid within 6 working days.

You will need to have the following to make a claim:

• The bank account number and sort code into which you want HMRC to pay the money.
• The name and phone number of the person HMRC to call with any questions.
• Your Self-Assessment UTR (Unique Tax Reference), Company UTR or CRN (Company Registration Number).
• The total amount being claimed for all employees and the total furlough period.
• A Government Gateway (GG) ID and password.
• Be enrolled for PAYE online.
• For each furloughed employee for who you will be claiming:

• Name.
• National Insurance number.
• Claim period and claim amount.
• PAYE/employee number (optional).

We hope that helps but please contact Michael Bauer of Cumbria Employment Solicitors on 016974 78222 or [email protected] if you have any queries.