On 20 April 2020, HMRC announced that the online portal to apply for the Coronavirus Job Retention Scheme (the “Scheme”) is now up and running. As of yesterday, employers can now apply for direct cash grants under the scheme through HMRC’s new online portal, with the money expected to land in their bank accounts within six working days.
On 17 April 2020, the Government published its fifth iteration of its guidance on the Coronavirus Job Retention Scheme with updates on individuals eligible for the Scheme and a new qualification date, which has now changed from 28 February 2020 to 19 March 2020. The qualification date is the date when an employee must have been on the employer’s PAYE payroll to be eligible for the Scheme.
The original guidance stated that an employee had to be on the payroll on 28 February 2020 to be eligible. The guidance now states: “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.”
The aim of this change is to enable individuals who fell outside the Scheme, perhaps because they had recently moved jobs to a new employer and were not on their payroll as of 28 February 2020, to now be eligible.
The qualification date was included in the Scheme to prevent businesses from making fraudulent claims by hiring “ghost employees” in order to claim furlough payments. However the new qualification date should still prevent fraudulent claims being made while bringing more employees in scope; in order to be eligible for the Scheme the employee must have been on the employer’s PAYE payroll on or before 19 March 2020, which was just before the Scheme was announced.
Direction to HMRC
On 15 April 2020, the treasury issued adetailed direction to HMRC under powers conferred to it under the Coronavirus Act 2020. It is the most detailed guidance released on how the Scheme will work and is an important source of information. The direction can be found here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879484/200414_CJRS_DIRECTION_-_33_FINAL_Signed.pdf
Clause 6.7 of the direction states in relation to furloughed employees that “an employee has 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”.
This suggests that “written agreement” by both employer and employee is now required to qualify under the Scheme. Employees already put on furlough, where there is no written agreement between the two parties that the employee will cease all work, may not fall within the requirements of the Scheme.
There are other clarifications set out in the Direction. For instance, the Scheme is not limited to those employees who would otherwise be made redundant. The Scheme applies to any employees who are furloughed "by reason of circumstances as a result of coronavirus or coronavirus disease" (clause 6.1(c)). This is broader than previously thought. There is also guidance on what is meant by regular salary and wages; e.g. performance related bonus and discretionary payments do not count as regular salary or wages and cannot be claimed.
The latest guidance from the Government (its fifth iteration) has also provided clarity on annual leave during the furlough period. The latest guidance states that while on furlough, furloughed workers will continue to accrue leave as per their employment contract.
An employer and furloughed worker may agree to vary the furloughed workers holiday pay entitlement as part of the furlough agreement; however, workers are entitled to 5.6 weeks of statutory paid annual leave which they must receive.
Furloughed workers can take holiday whilst on furlough and the Working Time Regulations (WTR) requires holiday pay to be paid to furloughed workers at their normal rate of pay, or where their rate of pay varies, calculated on their average pay received in the previous 52 working weeks. Employers will be obliged to pay the additional amounts over the grant (i.e. top up the 80% to 100%) if a furloughed worker takes annual leave during the furlough period, but employers will have the flexibility to restrict when annual leave can be taken during the furlough period.
If a furloughed worker usually works bank holidays, then it can be agreed with their employer that these days are included in the grant payment. If the furloughed worker usually takes the bank holiday as leave, then their employer must either top up their pay to the usual holiday pay amount in respect of those days or provide those days of holiday in lieu. However, the latest guidance also states that the Government is keeping the position on holiday during furlough under review, so this may be subject to change.
More information about the Coronavirus Job Retention Scheme and Furloughed Workers can be found in our full article about the Scheme (linked below) and we will continue to post regular updates as more information is released, so do keep an eye out.
Link to article: https://www.curzongreen.co.uk/about-us/articles/527-the-coronavirus-job-retention-scheme-furlough.html