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Latest Government Advice on Coronavirus and Employment Law
Job retention Bonus Scheme - update for employers
Changes to furlough scheme payments and “flexible furloughing”
There has been some confusion in the HMRC guidance with a query that employers could use the coronavirus job retention scheme to pay statutory notice. The question was did this mean that enhanced contractual notice periods would not be covered by the furlough scheme?
New guidance this morning (July 17th) has stated: "You can continue to claim for a furloughed employee who is serving a statutory or contractual notice period, however grants cannot be used to substitute redundancy payments."
New government treasury direction with effect from 1 July 2020 sets out in great detail the means of calculating the amounts payable by the employer and those that can be claimed under the Coronavirus Job Retention Scheme (CJRS) in respect of an employee who works part-time on flexible furlough. However, the means of calculating the amounts payable by the employer and those that can be claimed under CJRS in respect of an employee who works part time on flexible furlough are not straightforward.
The Chancellor has announced part time working will be allowed under the Coronavirus Job Retention Scheme from 1.7.2020 - this has been brought forward from the previously suggested date of August.
The Government has published a fact sheet which provides more details of how “flexible furloughing” will be able to be. The fact sheet details that from the 1st July, employers will be able to require furloughed staff to return to work for any amount of time and for any rota/shift working arrangements.
From the 1st July, the employer will still be able to claim under the Coronavirus Job Retention Scheme for these employees normal hours that are not worked but the employer will be required to pay in full for any hours the employee works, the employer will also be responsible for tax and National Insurance contributions on those payments.
Employers need to note that for them to claim the grant for “flexible furloughing” employees, the employer will have to agree with their employees this new flexible furloughing agreement and confirm that agreement in writing and as previously advised, a copy of this agreement kept and retained.
It has been announced that the Coronavirus Job Retention Scheme will continue until end of October - May 12
The furlough scheme has been extended from its original June deadline. Now furloughed workers across UK will continue to receive 80% of their current salary, up to £2,500. From August new flexibility will be introduced to help employees get back to work.
Chancellor Rishi Sunak said the furlough scheme would be extended by a further four months and furloughed workers could return to work part-time with employers being asked to pay a percentage towards their salaries.
New statistics published revealed the job retention scheme has protected 7.5 million workers and almost 1 million businesses.
More specific details and information around its implementation will be made available by the end of this month.
Employment expert, Susan Mayall said: "This is good news for employers and employees alike, however we need to wait to see what the details are when these are released at the end of May 2020. The suggestions so far are that the furlough leave amount will reduce to 60% and there may be a requirement for employers to contribute, but we need to wait and see the details."
For advice on your business and getting back to work check out https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19
Coronavirus Job Retention Scheme - furlough leave grant first day statistics - April 20
The HMRC online portal for employers to apply for a grant under the Coronavirus Job Retention Scheme opened at 5.30am on Monday 20th April 2020. We have been informed this morning by the eminent Barrister, Daniel Barnett, that up to midnight on the first day 185,000 firms submitted claims, resulting in 1,300,000 employees being furloughed with a total value of £1.5 billion. We are informed that the portal appeared to work remarkably well.
Public Funding and furlough leave
The Government published overnight on Friday 17th April 2020 a guidance on Coronavirus for financial support for education, Early Years and childrens’ social care. This details that organisations that are classified as public sector and where there is continued public funding, staff that are supported by that public funding should not be furloughed. For such organisations where there is also private income which has ceased or has reduced, it may be appropriate to furlough staff who would typically be paid from that private income, subject to set conditions. If you need further advice on this, please contact us directly.
Employment Law update CJRS - 21st April
With regard to furlough leave it is recommended to get the agreement of the employee but more recent subsequent guidance has stated that it is not necessary to get written agreement in response (rather than evidence of written notice) so if that has not been done, and it is not practical to do so, we believe the employer might be able to argue the matter with HMRC in future?
Treasury Guidance on CJRS - 17th April
NB - The Government’s Coronavirus Job Retention Scheme (CJRS) has been extended to 30th June 2020
Provisions for preventing fraud
A payment will only be made to an employer if it is for the purposes of making a payment under the CJRS, and not for any other purpose. If the employer becomes unwilling or unable to use it for the purposes of the CJRS it must be returned
No claim must be made which is an abuse of the scheme or contrary to the purpose of CJRS, so e/g. if people are still required to work but claims are made by employers, we would expect HMRC to take a very hard line on this.
An abuse of the scheme might also take place where an employer is publicly funded and claims payment under the CJRS for a publicly funded employee
An employer may make a claim for a payment under CJRS if the employer has a pay as you earn (“PAYE”) scheme registered on HMRC’s real time information system for PAYE on 19 March 2020 (“a qualifying PAYE scheme”) and has made a submission on or before 19th March including all relevant employees.
Therefore we understand that if an employee was on the payroll and real time information had been submitted for that employee on or before 19th March the employer can claim furlough leave payments for that employee.
We understand this new date was brought in to catch employees who might have changed jobs after 28th February, but before the details of the Scheme were announced.
Employees must have been instructed to cease all work for the employer, for at least 21 days or more, and because of circumstances arising from coronavirus or a as a result of coronavirus. This does not mean therefore that the employee has to have been at risk of redundancy but could include circumstances where it is impossible for a business to retain all its employees on a short term basis for example because of operational difficulties or for cash flow reasons.
The employee will not have ceased all work if they are working for an associated employer (including a company with a common director or one whose directors are close relatives of the director(s) of the original employer) or is otherwise indirectly working for the employer.
If the employee is not working because of sickness at the time of being furloughed, they will only be entitled to SSP (i.e. not entitled to furlough pay) until they are better.
Directors will still be allowed to undertake work such as filing company accounts or work necessary to fulfil his or her statutory duties as a Director, but that is all.
There must be an agreement in writing between employee and employer that the employee will cease all work for the employer – this can be by e-mail – this may mean that employers cannot avail themselves of the CJRS payments for employees who have not agreed in writing or by e-mail to be furloughed. We would advise all employers to therefore obtain their employees’ consent in writing at the time of furloughing, however if such consent was not obtained at the time to obtain this as soon as possible , even if this is retrospectively. We understand that HMRC will reserve the right to audit businesses in the future and recoup payments where express agreement was not obtained.
Training activities relevant to an employee’s employment does not count as work e.g. keeping up to date on professional qualifications.
Workers working through intermediary companies for the public sector and members or salaried members of limited liability partnerships will be treated as employees for the purposes of the CJRS.
The payment is £2500 per month or 80% of wage if the employee earns less than £2500 per month.
Payment is calculated by reference to the [higher of] the average monthly pay for the tax year 2019-20, AND the actual amount paid to the employee in the corresponding calendar period in the previous year (we assume, 1st March to 31st May) , or by any shorter period if the employee has not been employed for a year.
Employers will be reimbursed according to their employees’ contractual entitlements including contractual commission and compulsory overtime, but excluding employees’ discretionary performance related bonuses or tips for example. The employer should be reimbursed for 80% ,of their employees’ fixed salary or wage, where this does not vary, subject to the £2,500 cap. However, the matter of what employers are obliged to pay to their employees is a matter of the contract that exists between the parties. If the contract has been properly varied by the Furlough Agreement then an employer may be able to pay less the employee than is the norm, but this will be a matter that needs consideration in each individual situation.
Payments that are conditional upon some performance are excluded from the calculation. Some commentators have expressed concern therefore that, as payment to zero hours’s contract workers, is conditional upon them attending work, they would not qualify for the Scheme, which seems antipathetic to the reason for the Scheme and contrary to guidance which has sought to include “atypical or limb b workers”. Further clarification will no doubt be forthcoming in the next few days or weeks on this and other points.
Employers are entitled to reclaim pension contributions which are the lower of the actual amount paid to the pension scheme and 3% of the gross earnings that are paid to an employee in the 12 month reference period, provided the employee meets the lower limit for qualifying earnings in that pay reference period.
It would appear that the Government has got around the problem of the TUPE transfer issue, and the new employer previously not being able to make a claim for transferring employees (because of the employee snot being on the new employer’s PAYE system) and has made allowance for the new employer to claim provided that :
- the employee was employed by their former employer on 19th March 2020; and
- afterwards transferred and continued to be employed by the new employer; and
- there was no cessation of business; and
- the transfer did not break continuity of service for the employee.
The payment of CJRS under the CJRS can only be made for earnings in relation to the period 1st March 2020 to 30th June 2020 plus associated employers’ pension and National Insurance contributions
Please note that this captures some but not all of the details announced in the most recent Treasury Direction and some matters may change or develop in the next few days and weeks as further government guidance or announcements are published. If you are worried about a matter specific to you or your business, please contact our Employment Department on 0161 785 3500 or email firstname.lastname@example.org for further tailored advice.
Changing Furlough Dates - 15th April 2020
The qualifying date, when the employee has to have been on the employer's payroll, has today changed from 28 February to 19 March 2020. This is just before the Chancellors official announcement when he gave details of the scheme and it is hoped in this way fraudulent claims may be avoided, but at the same time it allows more recently employed people to benefit from the furlough process.
Updated Coronavirus Job Retention Scheme (3) 14th April 2020
What's the situation regarding employers only being allowed to furlough employees who were shielding if the employee was at risk of redundancy/lay off? This requirement has now been removed from the third version, therefore if you have employees who are shielding they can be furloughed irrespective of whether or not they are at risk of redundancy/lay off, meaning that even if you have work for them to do you can choose to furlough. Noting of course the potential health and safety risks.
Another change is that employers are free to change employees from being on sick pay to furlough and vice versa. Due to the government requirement for keeping the furlough leave letters/agreements for five years this suggests that there will be HMRC audits around these furlough leave payments in the future, there is also a warning that changing employees from sick pay to furlough should not be abused by furloughing staff to ‘top up’ SSP for short term absences. Our advice remains that if an employee is sick or self isolating they should receive sick pay, rather than be furloughed.
There were also questions raised regarding TUPE, this third version of the guidance has clarified that newly TUPE’d employees can be put 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."
Updates on annual leave, portal and TUPE 9th April 2020
Whilst we are awaiting further government guidance on this ACAS is now saying that employees can take annual leave on furlough and there is a report that HMRC customer support have said that taking Easter holidays will not break furlough leave. We do not know if that is the official HMRC line and are awaiting further guidance.
HMRC told a Parliamentary Select Committee that the online portal will open on 20 April, with the first reimbursements made on 30 April
Employees who are TUPEd to a new employer after 28 February will be eligible for furlough.
Apprentices April 2020
If you have apprentices on your team and you have furloughed them it is important to note that whilst they cannot undertake any services or work to gain revenue for their employer, they can continue their training and employers can encourage both training and assessment to take place remotely. Where necessary during the current crisis extensions to the timetable for assessments and breaks in learning will of course take place and all this should be recorded. HM Treasury will not be pausing apprenticeship levy payments for employers
Workers being able to carry over annual leave for 2 years March 2020
The Government has recently announced that it is allowing workers to carry over up to four weeks annual leave into the next two years, if it is not reasonably practicable for them to take their holiday entitlement due to coronavirus.
Please note this only relates to the four weeks under European legislation, the balance of the 1.6 weeks statutory leave will remain to be taken in the current year. Although, the 1.6 weeks statutory leave can be carried over for up to a year by agreement between the parties under existing law.
The Government announcement details that its reasons for the change are to ensure that workers won’t lose their leave entitlement and to give flexibility to businesses at a time when it is needed most.
The Government details that this will mean staff can continue working in the national effort against coronavirus without losing out on annual leave entitlement. The changes will also ensure that all employers affected by COVID-19 have the flexibility to allow workers to carry over leave at a time when granting annual leave could leave them short staffed in some key industries such as food and healthcare.
For more advice contact Susan Mayall on 0161 785 3500 or check out our special coronavirus Q&A