The Coronavirus Job Retention Scheme (CJRS) Portal is now live!
When submitting a claim employers are required to declare, amongst other things, that their "claim is in accordance with HMRC's published guidance".
Demonstrating once again a penchant for announcing CJRS Guidance changes at the end of working week (though currently keeping track of what day it is has its own challenges), late on Friday 17 April the Chancellor announced that the CJRS is being extended by one month to the end of June.
This was then followed by more revisions to the Employer's Guidance on the CJRS. That Guidance, readers will recall, was originally published on 26 March and revised on 4th, 9th, 15th, late on the 17th and early on 20th April. The late 17 April revision splits the Guidance into two parts (see below).
On 15 April the HM Treasury Direction in exercise of powers granted by the Coronavirus Act 2020 was published. That Direction sets out details of the CJRS;
On 17 April HMRC published 'A step by step guide' on how to make claims under the CJRS;
On 19 April the HMRC updated its statutory payments Manual. This makes it clear that furloughed employees will not be entitled to Statutory Sick Pay (SSP).
It is important to remember that these various publications are NOT guidance on employee rights.
Here our employment law experts look at what has change?
Extension of the CJRS operational period
The CJRS will now run in relation to the period 1 March to 30 June 2020. Employment law has driven this extension as much as economics. There are strict consultation timescales involved in making large scale redundancies which apply equally to employees on furlough. Ahead of Friday's extension of the CJRS some employers needing to comply with those obligations would have had to begin the collective consultation process. The extra month will buy those employers some breathing space but that may be short lived if lockdown continues.
The Employer's Guidance 15 April revisions
The key 15 April change is that the payroll eligibility date has been changed from 28 February to 19 March. Employers can claim for employees on payroll at that date.
The salary reference date for calculating the claim for salaried employees has also changed to 19th March 2020. The revised Guidance states that if, based on previous Guidance, an employer has calculated their 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), the employer can choose to still use this calculation for their first claim.
There is also a bit more detail on the documentation firms will need to provide when making a claim.
There has also been a change to the position for employees on unpaid leave. If an employee's unpaid leave began after 28 February 2020, those employees can now be furloughed. If however an employee began unpaid leave on or before 28 February, they cannot be furloughed until the date on which it was originally agreed they would return from unpaid leave.
The Employer's Guidance 17 April revisions
The Guidance: "Claim for your employees' wages through the Coronavirus Job Retention Scheme" has now been divided:
The new slimed down Employer's Guidance headlines are:
Agreeing in writing
As soon as the HM Treasury Direction was published paragraph 6.7 caused much concern. Under paragraph 6.7 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". This is a significant change as the then current Employer's Guidance only required the employer to confirm the agreement in writing. Paragraph 6.7 appeared to say that employers would need to ensure employees confirm their agreement to the furlough in writing in order for a claim to be made. This could be by a simple e-mail and a record kept for five years.
Following concerns over this discrepancy, the revised Employer's Guidance issued on 17 April now states:
"To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years."
As the Employer's Guidance now stands, it appears that in order to claim under the CJRS, employers must have the employee's agreement to being furloughed and that agreement must be evidenced in writing (for example an employer's confirmation email), but an employee's written response is not necessarily required. However at time of writing, the HM Treasury Direction has not been revised so not obtaining e-mail confirmation from the employee continues to be risky.
Beefed up fraud warning
Payments may be withheld or repayable in full to HMRC in due course if the claim is based on dishonest or inaccurate information or found to be fraudulent. It is important for employers to be aware that an online portal for employees and the public to report suspected fraud is being set up.
This is further emphasises by the now required declaration which must be made when submitting a claim. Employers are required to make the following declaration:
"By submitting your claim, you are confirming the following:
- You are claiming costs of employing furloughed employees arising from the health, social and economic emergency resulting from coronavirus
- Your claim is in accordance with HMRC's published guidance
- The information you have provided is correct, to the best of your knowledge
- All employees have been paid their wages before the claim was submitted, or will be paid in the next payroll
- If any of this information changes, you will contact HMRC to amend the claim."
There is clarification that the records to be kept should include the amount claimed for each furloughed employee and the period for which each employee is furloughed and a claim made under the scheme.
There is also a little more detail on the furloughing of those on fixed term contracts and who are agency workers.
The Work out 80% Guidance 17 April
Which payments can be taken into account
The new 'Work out 80% Guidance' contains some section that were previously in the' Employer's Guidance as to which payments can be taken into account but has been greatly extended and now includes several worked examples for:
- Working out the maximum wage claim
- Working out 80% of an employee's usual wage
- Working out how much can be claimed for employer National Insurance contributions
- Working out how much can be claimed for employer's pension contributions
We now have the first HMRC guidance on the question of annual leave during furlough. Although this topic is still not addressed in the Employer's Guidance, it is now included in the separate Guidance: Check if your employer can use the Coronavirus Job Retention Scheme (the 'Employee's Guidance')
The 'Work out 80% Guidance' and the 'Employee's Guidance' both state that workers continue to accrue annual leave while on furlough, and that they are entitled to "take holiday whilst on furlough. Working Time Regulations require holiday pay to be paid at the employee's normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations." But what is now 'usual pay'? Both also state "the employer and employee can agree to vary holiday entitlement as part of the furlough agreement". If the employee agrees to furlough leave with a consequential pay cut then arguably that would be the usual pay for any leave taken during the furlough period.
Whether holiday pay should be based on pre-furlough or furlough pay rates remains difficult to call. Paying at furlough rate will carry a risk of future claims for unlawful deduction of wages (for the underpayment of wages). Of course those claims could be settled in the future if and when (if – see below) the position is clarified.. As HMRC also state in their guidance: "during this unprecedented time, we are keeping the policy on holiday pay during furlough under review".
Which payments can be taken into account
The new 'Work out 80% Guidance' also contains some Guidance on claiming in relation to employees returning from:
- Family-related statutory leave;
- Being on sick pay; and
- Unpaid sabbatical or unpaid leave.
HMRC SSP Manual 19 April revision
On 19 April HMRC updated its statutory payments manual to provide that if employees are furloughed as part of the CJRS they do not qualify for SSP. This is consistent with the HM Treasury Direction. The manual is more persuasive than the Employer's Guidance which implies employees could go on SSP if they wished (though as the current rate of SSP is £95.85 per week, it is unlikely to arise).
Not revised in the Employer's Guidance is that it continues to suggest employers can furlough employees already on sick leave, the HM Treasury Direction however makes it clear that employees on sick leave can only be furloughed once that period of sick leave has ended.
The 20 April revisions
As the CJRS Portal went live some minor changes have been made to the Guidance. The "how to claim" section has been removed from the Employer's Guidance and is now included on the portal web page.
The Work out 80% of your employee's wages Guidance has added to the section on 'Use the calculator to also state that while the calculator can currently be used to work out what you can claim for most employees, it will no work if employees:
- receive any top-up pay in the claim period
- returned from statutory leave such as maternity leave in the last three months
- get director's payments
- have been transferred under TUPE
- have been employed at separate times throughout the year
- receive employer pension contributions outside of an auto-enrolment pension scheme
Where the calculator cannot be used a manual calculation will need to be prepared using the calculation guidance.
The Work out 80% of your employee's wages Guidance also corrects a mistake in one of the worked examples. Under the heading 'If your employee has not been paid for a full pay period up to 19 March 2020' the first example originally resulted in a figure of £509.32, this has been corrected to £407.46.
Both sets of Guidance now also advice employers not to contact them by telephone unnecessarily as to do so "puts essential public services at risk".