Job Retention Scheme Guidance – Latest Updates

Job Retention Scheme – Latest Guidance Updates

30th April – 7th iteration. 

An overview of the changes are:

  • The guidance now confirms that where a group of companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 28 February 2020, the new scheme will be eligible to furlough those employees and claim the grants available under the CJRS.
  • Information on furloughed employees working as union or non-union representatives has been added. This makes it clear that whilst on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. This confirms that it is not being a breach of furlough to accompany a colleague during disciplinary or grievance meetings, or redundancy consultation.
  • Information added that directors who pay themselves once a year (typically one-person businesses where most revenue is taken as dividends) are, subject to certain conditions, eligible for furlough.
    Grants under the CJRS are not classed as state aid.
  • Information has been added about employees who are furloughed and who started family-related statutory pay on or after 25th April, confirming the need to calculate their average weekly earnings differently.
  • Employers are able to claim through the CJRS for enhanced (earnings related) contractual pay for employees who qualify for either maternity pay, adoption pay, paternity pay, shared parental pay and parental bereavement pay.
  • Information on TUPE transfers – date changed from 19th March to 28th February.

23rd April –  6th iteration

An overview includes (plus other additional information);

  • An Eligibility Table has been added into the latest version.
  • Fixed Term Contracts – Fixed term contracts that are due to end during the furlough period can be extended or renewed. If a fixed-term worker’s contract ended after 28 February 2020 and they were on the payroll as at 28 February 2020 and an RTI submission to HMRC had gone in on or before that date, then they can be re-employed and furloughed. If their fixed-term contract ended after 19 March 2020 then provided they were on the payroll as at 19 March 2020 and an RTI submission made to HMRC on or before that date, then they can be re-employed and furloughed. However, if a fixed-term contract started and ended between 28 February and 19 March they are not eligible to be furloughed.
  • Annual Leave – We now know that holiday can be taken during furlough and that it doesn’t break furlough. Holiday must be paid at 100% normal pay with employers topping up the grant. It is also understood that employers can require staff to take leave during furlough as long as the correct notice is given (twice the notice as the leave required).
  • Bank Holidays – If employees would usually have been off work, bank holidays are treated as holiday (and therefore full holiday pay given) . If employees would normally have worked on a bank holiday, however, this can be counted as a regular furlough day. 
  • Redundancies – Where a redundancy would occur DUE TO the Pandemic, then the furlough scheme should be used. However, where redundancies are unrelated to the coronavirus pandemic, they can continue in the usual way, even while other staff are furloughed.
  • Family related Leave Entitlement (inc. maternity, paternity, parental & shared parental leave) – Furloughed workers planning to take paid parental or adoption leave will be entitled to pay based on their usual earnings rather than a furloughed pay rate.
  • HMRC Reporting Hotline – HMRC has now launched its hotline for anyone, including staff, who wish to report and expose companies for abusing the furlough scheme.

Unfortunately the scheme is becoming difficult to manage because in parts it is in conflict with the Treasury Direction (which is the closest we will come to legislation) and it is not quite the scheme now that was intended when it was introduced on 20th March. Not complaining however, the good intention is there to support businesses.

20th April – the HMRC on line portal opened to accept furlough payment claims from businesses, with details on how to make a claim.

17th April – the furlough scheme due to end on 31st May 2020 was extended until 30th April 2020.

17th April – the 4th iteration

  • The qualifying date, when the employee has to have been on the employer’s payroll, was changed from 28 February to 19 March 2020.
  • The Guidance states …… 

‘Employees you can claim for
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’.

The scheme now includes a large number of people who fell outside because they had recently changed jobs.  However, please note the important wording that the RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020

The 19 March date is just before the Chancellor announced details of the scheme, meaning it is still effective to prevent fraudulent claims (by businesses hiring ghost employees to claim furlough payments in respect of, as those ghost employees will not have been on PAYE on 19 March).

15th April – HMRC introduced the Treasury Direction, which is probably the nearest to legislation on the furlough scheme we will receive.

9th April – 3rd iteration

Three big changes, and several little ones.

The big ones:-

  • employers are free to switch employees from sick pay to furlough and vice versa, although this should not be abused by using furlough to ‘top up’ small amounts of SSP for short term absences.  Also, clarification that employers can furlough ‘shielding’ employees, and they do not have to be placed on sick pay.
  • confirmation that those with certain work visas will not be regarded as breaching their visa conditions if they receive funds under the furlough scheme:  “Grants under the scheme are not counted as ‘access to public funds’, and you can furlough employees on all categories of visa.”
  • employers of newly TUPE’d employees can put them on furlough: “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.”
    The little ones:-
  • clarification that the reclaimable NI and pension elements are on the furlough salary, not normal salary.
  • stating that employees cannot work for organisations that are linked to the employer, as well as not working for the employer, when on furlough.
  • businesses that engaged in payroll consolidation schemes after 28 February can place employees on furlough.
  • no part of the reclaimed grant can be siphoned off to fund benefits; the entire grant must be paid to the employee (with no deductions for fees, administration charges etc.

4th April – 2nd iteration

  • Employees can start a new job when on furlough (meaning they might end up earning 80% of the old salary and 100% of a new one). This was not prohibited in the earlier guidance, but the new guidance expressly allows it. The guidance does say it has to be allowed under the employment contract, but presumably the existing employer can waive that. The new employer must complete a starter checklist available from gov uk.
  • An employer can reclaim 80% of compulsory (presumably meaning contractual) commission back from HMRC, as well as basic salary.  This is good news for industries such as car salesmen and estate agents.  But it can only be referring to the commission from past sales as the furloughed employees cannot be completing new sales when on furlough. Discretionary bonus and commission payments are excluded.
  • Employers can reclaim 80% of fees (not sure what fees are) from HMRC. The previous guidance said they could not.
  • The 80% does not include non-monetary benefits (eg the value of health insurance or a car).
  • Company directors can be furloughed. They can still perform their statutory duties, but not other work for the company.
  • Employees can be furloughed multiple times, ie they can be furloughed, brought back to work, then re-furloughed (subject to each furlough period being at least three weeks)
  • Employers must notify employees of their furlough status in writing (the previous guidance did not require it be in writing) and keep the record of that written notification for five years.

26th March – 1st guidance published.

20th March – scheme announced with sparse details.