The government updated its guidance in relation to the Coronavirus Job Retention Scheme (“CJRS”) again on 14 May 2020 and 21 May 2020. Whilst the updated guidance deals with the extension of the CJRS, we are expecting specific information regarding how the CJRS will operate from 1 August 2020 (when employees will be able to return to work part-time and still receive money under the scheme) to be published by the end of May. One of the key updates to the guidance provides that employers must keep copies of all records relating to all claims made under the CJRS for 6 years rather than 5 years.
Following the updates to the guidance, a Further Treasury Direction dated 20 May 2020 was published on 22 May 2020 relating to the current scheme. As explained in our previous articles the Treasury Direction is the legal framework for the CRJS. The first Treasury Direction was published on 15 April 2020 and this has been updated so that it is in line with the updated guidance, however, some key changes have also been made which are outlined below.
Extension of the Scheme
The CJRS was initially set up to last until the end of June 2020. In its current form, the CJRS has been extended until the end of July 2020.
From 1 August 2020, employers currently using the CJRS will have more flexibility to bring their furloughed employees back to work part time whilst still receiving support under the CJRS. This revised version of the CJRS will be available to employers until the end of October 2020. Employers will be required to pay a percentage towards the salaries of their furloughed employees to ensure that employees continue to receive 80% of their salary, up to £2,500 per month.
The wording, which has been included in the updated guidance on the CJRS, states that the CJRS extension applies to “employers currently using CJRS”. This appears designed to prevent any abuse under the CJRS and it may be the case therefore that employers will be prevented from starting claims from 1 August onwards.
Statutory Sick Pay (“SSP”)
The Further Treasury Direction provides that if an employee is receiving SSP or is due to be paid SSP, furlough cannot begin until the period of incapacity for work for which the SSP is in payment or due to be paid has ended and the end of that period of incapacity has been agreed between the employer and employee.
The Further Treasury Direction states where an employee has taken or takes unpaid leave during the CJRS period (i.e. 1 March 2020 to 30 June 2020) an employer cannot make a claim for the employee under the CJRS in respect of the period of unpaid leave.
Where an employee was already on unpaid leave prior to the CJRS period, a claim may not be made under the CJRS until the expiry of the unpaid leave agreed between the employer and the employee. If no expiry date was agreed between the parties, the employer may claim under the CJRS at the point where the particular purpose of a specified event resulting in unpaid leave has been completed.
It has now been expressly clarified that directors who have been furloughed will not be in breach of the CJRS where they undertake work relating to making a CJRS claim in respect of an employee and making a payment of salary or wages to employees.
Agreement to Furlough Employees
The Further Treasury Direction has removed the requirement for the agreement with the employee not to undertake work during the period of furlough to be in writing. The Further Treasury Direction now states that the employer and employee have to have agreed that the employee will cease all work. The agreement with the employee (which can also be by way of a collective agreement) must specify the main terms and conditions which the employee will cease all work in relation to their employment, must be incorporated (expressly or impliedly) in the employee’s contract, and must be made in writing or confirmed in writing by an employer which may be by e-mail.
Calculating Wages – Non-Discretionary Payments
The guidance and the Further Treasury Direction have been amended to clarify the position regarding non-discretionary payments.
Employers can claim for non-discretionary payments under the CJRS which the employer has a contractual obligation to pay and to which an employee has an enforceable right. Where variable payments are specified in a contract of employment and these payments are always made to an employee, they become non-discretionary and can therefore be claimed under the CJRS. These payments can be in respect of overtime, fees, commissions or piece rates, payments made in recognition of the employee undertaking additional or exceptional responsibilities and payments in recognition of the circumstances to which the employee undertakes their duties. The Further Treasury Direction confirms that there must be a prescribed method of calculating the amount of variable pay (either by way of agreement, understanding or series of transactions). In respect of overtime payments, if an employee has been paid variable payments due to working overtime, these payments can be included in calculating the 80% of wages as long as the overtime payments were non-discretionary. Overtime payments will be non-discretionary where the employer is contractually obliged to pay the employee at a set and defined rate for the overtime they have worked.
Authorised Salary Deductions
The revised guidance has expressly confirmed that an employer must not enter into any transactions with an employee which reduces the amount an employee receives under the CJRS. This includes any administration charge, fees or other costs relating to an employee’s employment. However, where an employee has authorised an employer to make deductions from their salary, these deductions can continue while the employee is on furlough, provided that the deductions are not charges, fees or other costs in connection with an employee’s employment.
The revised guidance has clarified that for employees who have been continuously furloughed, claim periods must follow one after another, with no gaps in between.
The claim end date must also be no more than 14 days in the future from the date any claim is made. Any claim period must contain all the furloughed days that the claim amount relates to.
Paying Employees under the CJRS
The revised guidance has confirmed that an employer must pay the full amount they are claiming under the CJRS to the employee, even if the company is in administration. If the employer is not able to pay the full amount, the grant must be repaid to HMRC. The same applies in relation to employer national insurance contributions and pension contributions.
Making a Claim under the CJRS
Minor amendments have been made to the guidance for employers on how to make a claim including the requirement that employers supply the billing address in respect of their bank account (this was previously not included in the guidance) and that employers can now save a draft of the claim form which can be completed within 7 days of starting it (previously the session would time out after 15 minutes).
In respect of providing an employee’s national insurance number, the guidance now provides that an employer will need to search for the relevant employee’s number or contact HMRC if the particular employee does not have one.
The Further Treasury Direction has been updated to reflect that the relevant date for TUPE transfers is 28 February 2020 in line with the current guidance. The Further Treasury Direction has also provided further details in relation to the interaction between the CJRS and TUPE where the transferor is insolvent and the transferor is unable to make a claim because the TUPE transfer occurs before the three week minimum furlough period.