Yesterday evening, further Guidance for Employers was published by HMRC https://bit.ly/3ewlct0 confirming the Chancellor’s earlier announcement https://bit.ly/34PQ5UW that the Coronavirus Job Retention Scheme (CJRS) will now be open for four months from 1 March 2020 (30th June) and may be extended further. This followed concerns that if the CJRS closed on 31 May 2020, as originally intended, employers would need to start the 45-day consultation period today (18 April) if they anticipated the need to dismiss 20 or more employees within a 90 day period (we will be publishing a blog on this issue and other issues which employers should currently be considering on Monday).
Guidance on calculating and submitting claims to HMRC
It also confirmed that the online service through which employers will be able to apply to the scheme will open on Monday 20 April. HMRC has also published two new guidance documents. One is a ‘step by step’ guide for employers on how to claim under the CJRS, setting out the information that they will need to provide and the processes they will need to follow https://bit.ly/34KVKeN . The other is a guide to calculating 80% of an employee’s wages for the purpose of claiming under the CJRS including guidance on which payments can be taken into account https://bit.ly/3eyuuEX
Annual leave on furlough clarification
Yesterday evening HMRC also updated the Employees’ Guidance https://bit.ly/3cqAJZt providing some clarity on the issue of taking annual leave whilst on furlough. It confirms that it is possible to take annual leave whilst on furlough and that employers should top up to 100% of an employee’s normal pay. This should therefore settle the issue of whether taking annual leave breaks the 3 week block of furlough necessary in order to be eligible for the grant under the CJRS. It doesn’t however say whether an employer can make an employee to take annual leave while on furlough, thus depleting their holiday entitlement at the government’s expense. Curiously, the Guidance ends the section on annual leave by stating: “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.”
Confusion relating to furlough agreements
Among other changes, since the first iteration of the HMRC Guidance for employers was published on 26th March it stated that employers simply needed to write to employees notifying them that they have been furloughed. This was repeated again in the later iterations with the added confirmation that employers needed to keep a copy of the written notification for five years. Specifically, the Guidance states that employers must ‘confirm in writing to their employee’ that they have been furloughed, and that ‘if this is done in a way that is consistent with employment law’ then that will constitute valid consent for the purpose of the scheme. It also goes on to say that ‘the employee does not have to provide a written response’.
Unfortunately, the Treasury Direction to HMRC recently published on 15 April, (made under Ss.71 and 76 of the Coronavirus Act 2020 and so establishes the legal basis for the scheme) conflicts with the Guidance saying something rather different. The Direction states that an employee can only be furloughed for the purpose of the CJRS if the employer and employee ‘have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment’. This appears to require requires actual written agreement between the employer and employee rather than simple notification as the Guidance has previously stated. It is therefore unclear whether employers can claim under the CJRS for employees who have not specifically agreed in writing to being furloughed.
If you have used the version of the furlough letter/agreement drafted by Glaisyers, our view is that it is compliant with the Treasury Direction as it does confirm agreement with the employee to be furloughed and not attend work as well as accepting a reduction in pay (if you have not topped up the salary of furloughed employees). There are however many employers who relied on the first three iterations of the Guidance and simply notified employees they were being furloughed not getting written agreement to them ceasing all work. This is therefore going to require further clarity from the Government.
For support or guidance on the above, please contact the HPC team today.
Info above provided by Glaisyers