Following on from our previous updates on the Coronavirus Job Retention Scheme, both the government and the Treasury have provided further guidance, details of which are set out below.
The most significant change is that employees must have been on the employer’s payroll and included on the employer’s Real Time Information submission to HMRC on or before 19 March 2020 in order to be eligible to be furloughed. Previously the eligibility date was 28 February 2020 which meant that individuals who had recently changed employers could not be furloughed under the scheme. However, the government has confirmed that employees who stopped working for their employer on or after 28 February can still be re-employed and put on furlough, even if they were not on the payroll on 19 March.
The Chancellor announced yesterday that the scheme is due to go live on 20 April 2020 and that payments will be made to employers a few days after the claim is submitted (which allows for some time to check for fraudulent claims and BACS payments to be made).
In order to furlough an employee, the guidance now states that the employer and employee must have agreed in writing that the employee will cease all work for the employer. This can take the form of an email. This means that it is important to ensure that the letter or email sent to employees sets out clearly that the employee must not do any work while furloughed.
What constitutes work?
There has been a clarification that, as well as not doing any work for their employer, furloughed employees must not do any work for, or on behalf of, any linked or associated organisation. ‘Work’ includes providing services or generating revenue. The duties which may be undertaken by a director who is furloughed are very limited. A director can only undertake work to fulfil a duty or obligation arising from an Act of Parliament relating to the filing of the company’s accounts or provision of other information relating to the administration of the director’s company.
What constitutes pay?
Employers can claim for any regular payments made to employees, including wages, past overtime, fees and compulsory commission payments. Regular salary or wages does not include:
- Performance related bonuses
- Discretionary payments (including tips)
- Any payments which are conditional on any matter
An employer can also claim for payments which it “reasonably expects to be paid” to the employee which means that the employer can submit a claim for future sums to be paid. This suggests that the employer and employee can agree that the employer will not pay the employee until it has received the money from HMRC.
There have been some changes to the guidance on sick pay. As an employee retains their employment rights, they are still entitled to Statutory Sick Pay (and contractual sick pay) if they fall sick while furloughed. However, it has been confirmed that the employer can choose whether to move an employee who falls sick while on furlough to sick pay or keep them furloughed. If the employer keeps the employee on furlough they may still claim under the CJRS or if the employee is paid SSP the employer may be able to reclaim this from the government if the illness is coronavirus related. The employer can claim for SSP and under the CJRS for the same employee but these must relate to different periods of time.
An employee who is on sick leave may be furloughed but the employer must cease paying sick pay before furloughing the employee.
Which employees may be furloughed?
- Employees who are shielding or who live with someone who is shielding may be furloughed.
- Foreign nationals may be furloughed, no matter what category of visa they are on as grants under the CJRS do not count as ‘access to public funds’.
- Employees who transfer from one business to another under TUPE after 19 March 2020 may be furloughed.
- If a group of companies had several PAYE schemes but has transferred all employees onto one PAYE scheme after 19 March 2020, these employees may also be furloughed.
- In limited circumstances, contractors who are deemed employees under the off-payroll working rules (IR35) may be furloughed.
- Employees who went on unpaid leave before 28 February 2020 may be put on furlough from the date it was agreed that they would return to work.