COVID-19: Guidance for NI & UK employers on the Coronavirus Job Retention Scheme. Updated 30 April 2020
On Monday 20 April 2020 the Coronavirus Job Retention Scheme (the Scheme) opened for applications via the 'Government Gateway' portal. In just one week, over 387,000 applications have been made, covering 2.8m employees in Great Britain and Northern Ireland.
As we remain in lockdown, access to this Scheme is clearly a lifeline for both employees, for whom it protects their income, and the many businesses who will have been feeling significant pressure on cash flow.
Since our last update, the government has released a stream of updates to its guidance which clarify the scope of the Scheme and remove some (but not all!) of the grey areas.
We have highlighted below the key changes and clarifications that have been made. We have also identified a number of areas where employers will need to be careful in their approach.
Extension of Scheme
The Job Retention Scheme is to be extended to 30 June 2020 and there is scope for it to be extended for a further period, if necessary.
The government has moved the effective payroll date from 28 February 2020 to 19 March 2020. This means that employers can now make a claim under the Scheme in relation to employees who are on their PAYE payroll and for whom a Real Time Information submission had been made to HMRC on or before 19 March 2020.
It remains the position that employees who were employed on 28 February but subsequently were made redundant can be re-engaged and placed on furlough. If you are considering doing this, we recommend that advice is taken and the situation approached carefully as it may raise issues, not least in terms of what happens when the Scheme ends.
HMRC have produced a useful table in relation to employee eligibility:
|Was the employee employed with you as of this date?||Date RTI submission notifying payment was made to HMRC||Eligible for CJRS?|
|28 February 2020||On or before 28 February 2020||Yes|
|28 February 2020||On or before 19 March 2020||Yes|
|28 February 2020||On or after 20 March 2020||No|
|19 March 2020||On or before 19 March 2020||Yes|
|19 March 2020||On or after 20 March 2020||No|
|On or after 20 March 2020||On or after 20 March 2020||No|
Agreement to Furlough
The guidance states that to be eligible for the grant employers must confirm in writing to their employees that they have been furloughed. It also states that as long as this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming under the scheme. The updated guidance now states that collective agreement between employer and Union will also ensure eligibility. As we highlighted previously, the Treasury Direction states that consent must be obtained. The guidance appears to contradict this however, as it states, "there needs to be a written record but the employee does not have to provide a written response". Given this inconsistency, we recommend that employers take advice on issues relating to consent, particularly where decisions were made to furlough employees overnight such that any consent obtained now will be retrospective in effect. Employers should note that, subject to existing contractual terms, express consent may be required in any event to avoid unlawful deduction from wages claims where payments of employees are reduced to 80%.
One of the key aspects of the Scheme that the guidance had been silent on related to how holidays were treated. This has now been clarified (to a degree). Furloughed employees will continue to accrue leave as normal during any period of furlough. Employees can also take both bank holidays and annual leave while on furlough but must be paid at the employee's normal rate of pay in accordance with the Working Time Regulations – that is 100% of their pre-furlough salary. Employers will therefore have to top up salary for any periods that are taken as annual leave. It is worth noting that the government has stated the approach to annual leave will be kept under review. It is not yet clear whether an employer can require an employee to take leave, as they would otherwise be able to do under the Working Time Regulations.
Self-isolating or on sick leave
If an employee is on sick leave or self-isolating as a result of Coronavirus, they will be entitled to Statutory Sick Pay (SSP) (subject to other eligibility criteria). The Job Retention Scheme is not intended for short-term absences from work due to sickness and as such short-term illness/self-isolation should not be a consideration in deciding whether to furlough an employee.
Employers are, however, entitled to furlough employees who are shielding or off on long-term sick leave. Guidance suggests that it is up to an employer to decide whether to furlough such an employee, however, in relation to those on long term sickness absence, the Treasury Direction suggests a decision to furlough cannot be made until the employee ceases to be entitled to SSP. We recommend that specific advice is taken if an employer is considering furloughing such an employee, especially bearing in mind that an employee placed on furlough can only recover wages through the Job Retention Scheme, and not the SSP rebate scheme.
Making a claim
The online HMRC portal is now open and presents a straightforward, albeit inflexible, means of submitting a claim. HMRC has published new guidance on how to claim under the Scheme via the portal as well as how to calculate 80% of employees' wages for the purposes of submitting a claim. An online calculator is available although this currently only supports claims in relation to employees with fixed rates of pay.
Further guidance has been set out in relation to the elements of pay that can be claimed under the Scheme which advises (again) that regular wages and non-discretionary overtime, fees commission and piece rate payments can be included. The Treasury Direction outlines the approach to be taken when deciding whether to calculate payments on the basis of an employee on a fixed rate as opposed to those employees whose pay is variable. The various categories should be considered carefully when making a decision whether to categorise an employee as having fixed or variable pay.
HMRC has helpfully stated that provided the employer’s approach is reasonable, they will not refuse or recover claims based on how employees have been categorised. This guidance must, however, be followed carefully to ensure valid claims are made and to avoid any issues should HMRC decide to retrospectively audit employers, which it has clearly indicated it intends to do.
Benefits provided through salary sacrifice schemes (including pension contributions) should not be included. In order to avoid breach of contract claims, employers should maintain these benefits during any period of furlough, unless the employee agrees otherwise as part of the furlough arrangements.
Finally, employers should be aware of the repeated warnings in relation to dishonest or deliberately fraudulent claims under the Scheme. Employers should maintain accurate records and carefully consider the guidance in relation to eligibility and the intention of the Scheme in relation to what employees can and cannot do during periods of furlough. Employers should also be aware that HMRC has put in place an online portal for employees and the public to report suspected fraud in the Coronavirus Job Retention Scheme.
Further updates are likely to materialise as and when practical issues with making claims under the Scheme are raised with HMRC. The nature of the Scheme may also change as the government's approach to lock down develops and the 'unfurloughing' process begins. We will seek to keep you updated with any major developments to the Scheme in the UK.
For those employers who have employees in both Northern Ireland and the Republic of Ireland we would also highlight that there are very distinct differences in the schemes available in each jurisdiction. The Republic of Ireland has also recently implemented significant changes to the application of its Temporary Wage Subsidy Scheme, which should be reviewed and considered carefully by employers.
If you have any specific questions around the Irish Scheme and the recent changes please contact Laura Feely, Associate, or any member of the Employment & Incentives Belfast team.
Date published: 30 April 2020