The UK Job Retention Scheme (JRS) opened for online applications on 20 April 2020. Access to the online portal can be found here.
The Government has also published a separate guidance note here which provides details of how to calculate 80% of the employee’s wages to claim through the JRS and some helpful worked examples of how to calculate the amounts for different pay periods. The guidance provides further details of how details will be entered on to the system depending on the number of staff being furloughed.
On 15 April the UK Chancellor made a Treasury Direction under Section 76 of the Coronavirus Act 2020. The Direction is the legal framework for the JRS. On the same date HMRC issued a further update to its guidance on the JRS with further significant amendments being made on 17 April. It is anticipated that this is final version of the Scheme, although the Direction does provide for the right to make further amendments in the future.
Changes to the JRS
In addition to the Direction and the amendments, the Government issued a press release confirming that the JRS should be extended from 31 May to the end of June and the Guidance has been amended stating that the temporary scheme is in place for an initial period of 4 months from 1 March 2020, but may be extended if necessary.
The Direction and the amended Guidance revise the date on which the employee must be on the employer’s payroll in order to qualify to be furloughed. The original date was 28 February, but this has now been revised to 19 March 2020 (the date just before the JRS was announced). There is an additional requirement that an employee must be on the PAYE payroll on 19 March and have been notified to HMRC on an RTI submission on or before that date. This means that those employees, who had previously fallen outside the JRS, because they had resigned or left employment and not started with a new employer, will now be able to benefit from the scheme, as long as they had started the new employment before 19 March 2020.
There is also further clarifications regarding unpaid leave. Although the Direction is not entirely clear on this point, the Guidance suggests that while an employee who was on unpaid leave after 28 February can be claimed for under the JRS, this can only apply from the date that they are formally put on furlough instead of unpaid leave. If individuals were on unpaid leave before 28 February they can only be furloughed on the date that it had been agreed that they would return from unpaid leave. This is to prevent any abuse of the system.
The Direction requires that a furloughed employee must have been instructed to cease work and the employer and employee must have agreed in writing (which could be in electronic form such as an email) that the employee will cease all work in relation to their employment. Under previous versions of the Guidance), the employer is simply required to notify the employee that they were being placed on furlough. However, the Guidance now states that if the confirmation is sought which is consistent with employment law then that consent is valid for the purposes of claiming under the JRS While there must be a written record of the furlough arrangement the employee does not have to provide a written response. It is therefore not clear whether an employee can impliedly give consent. If there are changes to the employees terms and conditions, such as a reduction in wages then employers should seek express consent to those changes. Some employers however may not have sought agreement to the furlough arrangement and therefore on the strict reading of the Direction the employee may not be placed in furlough. Whether the employer can seek retrospective agreement to the furlough arrangement and therefore permit the employee to be furloughed is unclear. Further information is awaited on this point.
The Direction and the Guidance have also made some changes in relation to employees who are on SSP. In the Guidance it is suggested that if employees are on long term sickness then the employer can furlough those people if they are eligible to do so. However, the Direction implies that the period of furlough should not start until the person has ceased to be eligible for SSP. Those who are now eligible for SSP has also been extended by further amendments to the SSP legislation to include those who are classed as extremely vulnerable and at a high risk and are advised to remain at home for at least 12 weeks. This extension of SSP is intended as a safety net for individuals in cases where their employer chooses not furlough them under the JRS and does not have other suitable policies in place such as the ability to work from home and the Guidance clarifies that an employer can claim back from both the JRS and the SSP rebate scheme for the same employee but not for the same period of time.
Reference is at last included to holiday pay. It states that employees can take holiday whilst on furlough but that the Working Time Regulations 1998 require holiday pay to be paid at the employee’s normal rate of pay and so if a furloughed employee takes holiday the employer should pay the usual holiday pay and will only be allowed to claim for the 80%. Some employers may decide that they cannot afford to pay the additional pay and the guidance does state that employers do have the flexibility to restrict when leave can be taken if there is a business need. This could apply for both the furlough period and the recovery period. If an employee usually takes bank holidays as leave then the employer would either have to top up their usual pay or give the employee a day of holiday in lieu. Employers will have to think carefully regarding issues of holiday during the furlough leave and the government has said in the guidance that it is keeping the policy on holiday pay during furlough under review.
The Guidance setting out how the calculation of the amount of wages to be paid sets out that wages include regular payments to be made to the employee including non-discretionary overtime, commission payments and fees. However, discretionary payments should not be included and neither should non-cash payments or non-monetary benefits such as a company car or salary sacrifice schemes that reduce an employee’s taxable pay.
The guidance provides further details of how details will be entered on to the system. If the employer has fewer than 100 furloughed staff then the employer will be asked to enter details of each employee they are claiming for directly on to the system. If there are 100 or more furloughed staff then the employer will need to upload a file with the information rather than input it directly into the system. The file should contain the same information which includes the name, National Insurance number, claim period and claim amount, and the optional requirement of the payroll or employee number. HMRC makes it clear that it is the employers responsibly to retain records and calculations of the claims and also to provide the employees with details of the claims that are made on their behalf. The employees should not contact HMRC.
The amended guidance also confirms that HMRC will audit the JRS and ensure that it is not abused by employers. Payments under the JRS may be withheld or will need to be repaid in full if the claim is based on dishonest or inaccurate information or found to be fraudulent. There will also be an online portal for employees or members of the public to report suspected fraud under the JRS.