UK: Covid-19 UK: Furlough: Coronavirus Job Retention Scheme Opens And Further Guidance Issued

The government's Coronavirus Job Retention Scheme (CJRS), which has been extended until the end of June, is now open for claims. This update explains what employers need to do to make their claim, and summarises the latest updates to HMRC's guidance for employers and employees on the scheme. It also covers the new guidance on the Coronavirus Statutory Sick Pay Rebate Scheme.

What do employers need to do to make their claim?

Claims under the CJRS must be made by employers online. The online service through which employers can claim is now open and the link to it can be found here.

The guidance for employers on the scheme (' Check if you can claim for your employees' wages through the Coronavirus Job Retention Scheme') and the guidance for employees ('Check if your employer can use the Coronavirus Job Retention Scheme') have been further updated.

HMRC has issued a step-by-step guide for employers to assist them when they make a claim under the scheme. This sets out the information that employers are required to provide and what employers need to do to make a claim.

A new guide ('Work out 80% of your employees' wages to claim through the Coronavirus Job Retention Scheme') has also been issued to assist employers in calculating how much they can claim under the CJRS. It also includes a calculator to help employers work this out and various examples on how to calculate claims.

This includes guidance on what amounts can be included in the 'reference salary' (of which 80% can be claimed subject to a cap of £2,500 under the scheme) and on how much employers can claim for employer NICs and employer pension contributions. It provides guidance on working out which payments can be taken into account (e.g. 'regular wages', non-discretionary overtime, non-discretionary commission payments) and which cannot (e.g. tips, discretionary bonuses, discretionary commission payments, non-monetary benefits and salary sacrifice schemes (including pension contributions) that reduce an employees' taxable pay).

The guide clarifies that 'reference salary' for employees returning from paid/unpaid family-related statutory leave, sick leave, unpaid sabbatical or unpaid leave should be based on their normal salary prior to that leave (employers should refer to the guidance for further information on this).

Employers should read the above links carefully before making a claim and ensure that they have all the required information ready.

• Employers can only claim for periods when their employee is on furlough
• Employers cannot make more than one claim during a claim period – they should make their claim shortly before or during running payroll
• Employers must claim for all employees in each period at one time – they cannot make changes to their claim once it is submitted
• Employers can make their claim in anticipation of an imminent payroll run, at the point they run their payroll or after they have run their payroll. Claims can be backdated to 1 March 2020 or any subsequent date from which employees were furloughed. A claim cannot start any earlier than the date the employee was first furloughed. This is relevant to employees who were made redundant or stopped working for their employer between 28 February and 19 March and have been rehired.
• Employers should keep records of any claim made under the CJRS, the amount claimed for each employee and the period each employee is furloughed.

The guidance also includes information about what happens after the claim is made, how to treat grant payments in Real Time Information and on the tax treatment of the grant.

Key points for after making a claim include:

• HMRC will check the claim, and if the employer is eligible, pay it to the employer by BACS to a UK bank account
• Employers will receive payment six working days after making an application – so if they wish to receive a payment from the scheme by the end of the month, employers must submit their claim at least six working days in advance of this for the money to clear into their bank account in time
• Employers must pay the full amount they are claiming to their employee in the form of money, even if their company is in administration. If they are not able to do that, employers must repay the money to HMRC. The same applies in relation to employer NICs and employer pension contributions that employers claim – these must be paid in full or the money must be repaid to HMRC.
• Employers must report the amount of grant they receive and pay to an employee through Real Time Information, in the same way they would report their normal pay and they should make these submissions on or before the date they pay their employee.
• HMRC payments may be withheld or need to be repaid in full if the claim is based on inaccurate information or found to be fraudulent

What are the key changes in the recent guidance updated on 17 April 2020?

The key issues covered in the new guidance are as follows:

• CJRS extended a further month to the end of June

The scheme will now be open for four months from 1 March 2020, and may be extended further. This will assist large businesses where 100 or more people are at risk of redundancy and they therefore require a 45 day collective consultation period.

• Requirement of written agreement from employee

The Treasury Direction released on 15 April 2020 requires that the employer and employee must agree 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 during furlough. Please see our update on this Direction for further information. This contradicts HMRC's previous guidance, which only required the employer's written notification to employees.

The new guidance says that employees do not need to provide agreement in writing:

And when employers submit a claim via the portal, under the declaration, they must confirm that their claim is made in accordance with the HMRC guidance – there is no reference to the Treasury Direction.

That said, given the contradiction between the Treasury Direction (which establishes the legal basis for the scheme) and the HMRC guidance, it remains unclear whether HMRC will refuse to reimburse employers if they do not have employees' specific agreement in writing to being furloughed. So employers should therefore still consider seeking furloughed employees' written agreement, to avoid the risk of HMRC requiring grants made in respect of those employees to be repaid.

• Annual Leave can be taken and paid at full pay

The guidance confirms that:

• annual leave continues to accrue during furlough
• it is possible to take holiday (including bank holidays) while on furlough
• employers should pay furloughed employees their usual (pre-furlough) holiday pay in accordance with the Working Time Regulations
• employers can claim under the scheme for annual leave days but will be required to "top up" employees' pay to the level of their usual holiday pay.

The guidance is silent on whether employers can compel an employee to take annual leave while on furlough, to reduce the employee's holiday entitlement whilst allowing employers to claim the furlough grant.

Note also that the guidance concludes that 'during this unprecedented time, we are keeping the policy on holiday pay during furlough under review' so there may well be changes to the holiday pay guidance in the future.

Coronavirus Statutory Sick Pay Rebate Scheme

There is a new guide on making a claim under the Coronavirus Statutory Sick Pay Rebate Scheme, which is available to employers with fewer than 250 employees on 28 February 2020.

Employers can claim back the current rate of Statutory Sick Pay (SSP) paid to current or former employees for periods of sickness due to Covid-19 which started on or after 13 March 2020.

The repayment will cover up to two weeks, starting from the first day of sickness, if an employee is unable to work because they:

• have coronavirus
• cannot work because they are self-isolating at home, or
• are shielding in line with public health guidance

Employees do not have to give their employer a fit note to enable a claim to be made.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.