On 20 April 2020, the Coronavirus Job Retention Scheme (CJRS) portal opened. Prior to doing so yet further guidance was issued meaning the Treasury Direction reported on in our last LELR on 16 April 2020 turned out not to be the absolute final word on the CJRS.

Extension of Scheme

On the afternoon of 17 April 2020, following the extension of the lockdown for at least another three weeks, HM Treasury announced that the CJRS had been extended from 31 May 2020 to the end of June 2020 and backdated to 1 March 2020. This news was welcomed by employers and employees alike although there is every chance calls for further extensions will be made, particularly if the lockdown is extended again.

Updated guidance

At the same time as announcing the CJRS extension, HMRC published a fifth update to its guidance for employers and employees. A new guide entitled “Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme” provides further guidance on the payments that can be included as part of the “reference salary” and the process that ensues once a claim is made. The employer guidance has been updated to reflect the fact the portal has now gone live.

We cover the updated information on holiday and sick pay in the second article of this LELR. The other key points are below.

Readers will recall from our last LELR edition that the Direction issued by the Treasury had stated that an employee is only ‘instructed’, and therefore furloughed, where an employer and employee have agreed in writing (including by email) that the employee will cease all work in relation to their employment. The updated guidance now 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 CJRS. There needs to be a written record but the employee does not have to provide a written response. A record of this communication must be kept for five years."

This paragraph reinforces our view that provided there has been suitable individual notification and acceptance, or a collective agreement has been entered into to vary terms and conditions, or reliance is placed on a lay-off clause in the existing contract of employment, this will enable an employer to access the CJRS. The declaration employers are required to make when submitting a claim asks for confirmation that it is submitted in accordance with HMRC’s guidance.

What else is new?

The issue of fraud is addressed with HMRC making clear it will check all claims made through the CJRS and that payments may be withheld or need to be reimbursed in full if they are based on inaccurate or dishonest information. Furthermore, HMRC has put in place an online portal for employees and members of the public to be able to report any suspected fraudulent activities. Similar revised terms have been inserted into the employee guidance which stresses that they should report any abuses such as employees not actually receiving the money which has been claimed, people working whilst on furlough and employers making a backdated claim to include periods where an employee was actually working.  

As a point of clarification, the new guidance makes clear that if an employer re-engages an employee who was on its payroll on 28 February 2020 and was made redundant or stopped working for them after that date (and prior to 19 March 2020) they can only claim from the date the employee is actually re-engaged and furloughed. The claim cannot cover the historic period in which the employee was not actually working. 

The section on fixed-term contracts has been further expanded in the revised guidance. The requirement is that any such contracts must be extended or renewed before they expire (even as late as the day before it was due to expire) otherwise the employer is not entitled to place the employee on furlough. Given that those on fixed-term contracts would be like any other worker who had stopped working for their employer, it would logically follow that provided they were on payroll on 28 February 2020 and left before 19 March 2020 they could be re-engaged and furloughed in the same way as employees not on these kind of arrangements.   

Finally, further guidance is provided over the records that employers are required to keep, which should include records of the amount claimed for each furloughed employee and the period for which each employee is furloughed. 

The “Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme” guidance provides practical guidance to employers who are accessing the scheme, including an online calculator to assist with calculating 80% of an employee’s wages.

It states that “regular wages” include non-discretionary overtime, non-discretionary fees, non-discretionary commission payments and piece rate payments but excludes discretionary payments such as tips, discretionary bonuses and discretionary commission payments. The Direction drafting is, however, still likely to cause problems. For example, on overtime payments it is still not entirely clear if they are conditional on the employee working above and beyond their contracted hours, particularly if the overtime is not compulsory. We would hope the intention is to include overtime payments where there is an obligation on an employer to pay for it rather than an obligation to offer the hours in the first place. It remains an area where clarification would be useful.   

Articles shared by Thompsons relating to coronavirus (COVID-19) are correct at the time of publication. You should check the government's guidelines for the latest information and advice at https://www.gov.uk/coronavirus.

To read the CJRS employer guidance in full go to: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

To read the CJRS employee guidance in full, go to: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

To read the employers guidance on working out 80% of wages in full go to: https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme