Since our last updates on the Coronavirus Job Retention Scheme (“CJRS”) on 17 and 20 April 2020, most notably about holiday while on furlough, the government has updated its guidance further (on 20, 23, 30 April and 1 May 2020). This has included clarification in respect of the eligibility criteria for employees, union representatives on furlough, TUPE, company directors and maternity allowance. New regulations dealing with the calculation of family related statutory pay for furloughed employees also came into force on 25 April 2020. In this article we look at the various changes:
HMRC have now clarified that it is up to each employer to decide the length of its claim period, which will be based on how frequently each employer runs its payroll. It is important to note that employers cannot make more than one claim during such claim period and therefore employers should take care to include all employees who are furloughed for the relevant claim period as they will not be able to make another claim for the same or any overlapping period.
Extending furlough periods
Whilst the guidance has previously dealt with the minimum period employers may claim under the CJRS (three weeks), the latest guidance has now confirmed that each period of furlough can be extended for any amount of time. It is important to note, however, that the last day employers can claim through the CJRS will be the end date of the CJRS (currently 30 June 2020).
Employees on fixed term contracts
Employees on fixed term contracts can be re-employed and furloughed if:
• their contract expired after 28 February 2020 and a real time information (“RTI”) payment submission for the employee was made on or before 28 February 2020; or
• their contract expired after 19 March 2020 and an RTI payment submission for the employee was made on or before 19 March 2020.
Where the same contract started and ended between 28 February 2020 and 19 March 2020, a claim under the CJRS cannot be made.
Employees who have left
The recent guidance has also resolved a discrepancy between a previous version and the Treasury Direction dated 15 April 2020 (which sets out the legal framework for the CJRS) (“Treasury Direction”) to confirm that employees who started work before 19 March but whose employment terminated on or after that date can be re-engaged and then put on furlough.
The guidance now includes a helpful table to set out who is eligible for furlough in relation to start dates and RTI submissions:
If an employee has had multiple employers over the past year
If an employee has had multiple employers over the past year, has only worked for one of them at any time and is being furloughed by their current employer, their former employer cannot re-employ them and claim under the CJRS.
Company Directors with an annual pay period
The latest guidance has clarified that directors who are paid annually are eligible to claim so long as they meet the relevant conditions. These include, being included in the company’s RTI submission on or before 19 March 2020 which relates to earnings in the 2019/20 tax year.
Union and non-union representatives
Furloughed employees who are union or non-union representatives may continue to undertake activities for the purpose of individual or collective representation. They must not, however, provide services to or generate revenue for the employer. This means it is not in breach of furlough for a union official to act as a statutory companion at a meeting to which the right to be accompanied applies.
Agreement to furlough employees
There remains a discrepancy between the guidance and the Treasury Direction as to whether employees must have agreed in writing to cease all work – the Treasury Direction says that they do, whereas the guidance 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 through the scheme” i.e. only the employer has to confirm in writing that the employee has been furloughed. If the employee’s consent is not in writing, but can be taken as implicit from them going on furlough, it seems very unlikely that a claim under the CJRS would be invalidated.
The guidance has been updated to provide that collective agreement reached between an employer and a trade union will be acceptable for the purposes of evidencing employee consent to being put on furlough.
TUPE and payroll consolidation
The guidance has been updated to provide that employers are eligible to claim under the CJRS in respect of employees of a previous business transferred after 28 February 2020 (this date was 19 March 2020 under the previous guidance) if either the TUPE or PAYE business succession rules apply.
Reporting obligations for payments made to furloughed employees to HMRC
HMRC has published new separate guidance regarding employers’ reporting obligations to HMRC for payments made to furloughed employees (https://www.gov.uk/guidance/reporting-payments-in-paye-real-time-information-from-the-coronavirus-job-retention-scheme).
This guidance sets out that where an employer has continued to pay its employees during furlough and before receiving the grant, the employer’s RTI submission obligations will not change once the employer receives the grant (provided the employer had complied with its RTI submission obligations). If, however, the employer has deferred payment of wages until receipt of CJRS grant monies, the guidance explains what reports the employer has to make and the timing of those, and includes various scenarios.
Calculation of family related pay for employees on furlough
The Maternity Allowance, Statutory Maternity Pay, Statutory Paternity Pay, Statutory Adoption Pay, Statutory Shared Parental Pay and Statutory Bereavement Pay (Normal Weekly Earnings etc.) (Coronavirus) (Amendment) Regulations 2020 (the “Regulations”) came into force on 25 April 2020. The Regulations outline the calculation of “normal weekly earnings” for the purposes of SMP and other family related statutory payments such as adoption pay where the relevant employee is on furlough.
The Regulations provide that an employee’s normal weekly earnings for calculating family related statutory pay will be based on their usual earnings rather than their furloughed rate of pay, if their family-related pay begins on or after 25 April 2020.
Where an employee is receiving maternity allowance while they are on maternity leave, they should not receive furlough pay at the same time.
If an employee agrees to be put on furlough and ends their maternity leave early, they will not be eligible for furlough pay until the end of the required 8 weeks’ notice period to end maternity leave.
We hope that you find the guidance in this article useful. This article is a general summary of the law. It should not replace legal advice tailored to your specific circumstances. If you require tailored advice in relation to what is covered, please contact one of the Employment Team at Winckworth Sherwood LLP.