Over the weekend the Government updated the Corona Virus Job Retention Scheme, CJRS guidance, so grab yourselves a cuppa and take a read of what it all means. This gives us CJRS guidance on some of the areas we have been waiting for answers to but still leaves many questions! As always we will continue to do our best to get updates out as quickly as possible but please also always do your own due diligence or check with us if there is any new news before you take any action.
If you want to read the details yourself here are the links
Note that the employee guide states that “your employer might be able to keep you on the payroll if they’re unable to operate or have no work for you to do because of coronavirus (COVID-19)” and the employer guidance states “It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus” – these are very broad definitions therefore of who can possibly be furloughed – but do remember it is still the BUSINESS DECISION.
We have sent out a lot of CJRS guidance prior to this – the below is intended therefore to fill in some of the gaps and expand on what we have already advised in the last few weeks.
- The system to claim is still not available yet….
- As far as we know the furlough scheme still only applies to employees (including zero hours and temporary or fixed term employees and apprentices) not casual workers – you can chose to extend the contracts of temporary or fixed term employees and continue furloughing them
- It still the case that once you as a business decide to furlough you will need your employee’s agreement – if your contract has a temporary lay-off clause in it then you can deem that your employees have agreed but you should still have them sign a furlough agreement to confirm the terms of that and for your audit trail for HMRC
- It is still the case the employees must have been on your payroll on 28 February to be eligible for you to claim furlough payments from HMRC for them (so you could still furlough new starters but you would do so at your own cost)
- Calculating furlough pay is as follows (always subject to the £2.5k maximum):
- Full or part time employees on a salary – claim for 80% of the gross employee’s salary as of 28 February 2020
- Employees whose pay varies
- If the employee has been employed for 12 months or more, you can claim the highest of either the same month’s earning from the previous year OR average monthly earnings for the 2019-2020 tax year
- If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work
- If the employee only started in February 2020, claim for 80% of a pro-rata for their earnings so far
- A significant addition to the guidelines now state that pay (to pay the employee and to claim back) is calculated including compulsory commission, fees and past overtime but not discretionary commission (including tips) or bonuses, non-cash payments or taxable benefits in kind (car allowances or health insurance for example) – this was not made clear until now so the furlough leave agreements do not specify this level of detail – you should consider what this means for your business and clarify to your employees what will be included – in most cases we think this will be good news as previously it was generally thought that the payments would be on basic salary only – please check with your accountant or payroll provider for the exact amounts to pay staff and to claim
- Another piece of information that was not covered before is that the HMRC has agreed that COVID-19 counts as a “life event” that could warrant changes to salary sacrifice arrangements (which may include pension schemes), if the relevant employment contract is updated accordingly – if this applies to your employees contact us to discuss the implications
- A further significant clarification is that if an employee left your employment for any reason (either due to you terminating their employment including but not limited to redundancy or due to their resignation) – the Chancellor has stated that you can reinstate and place the employee on furlough – we advise some caution in making this decision as there is as yet no guidance (but quite a bit of concern) on the liabilities this could create for your business
- It is confirmed that employees can have their employment terminated during furlough (redundancy or otherwise) and that they can be in furlough for their notice period
- It is confirmed that you must furlough for a minimum of three weeks in order to claim the reimbursement but that you can rotate employees on furlough as long as each furlough period lasts as least that three weeks
- You can now require employees to take Bank Holidays during a period of furlough – we don’t yet know about the remainder of their holiday entitlement – we suggest you communicate this to furloughed employees this week before the Easter break. If you do require staff yo take the Bank Holidays as holiday you will need to top up their pay to 100% for those days.
- It is still the case that if an employee had two jobs prior to being furloughed they can continue to work in their other job if you furlough them or be furloughed from both jobs
- It has now been clarified that employees who you furlough can take a new job with no impact to the furlough payments – this will be good news for some employees who have seen a significant cut to their salary – however the employee can only do this if your contract of employment allows for it although you may of course wish to be flexible in applying any restrictions at this time (not working for a competitor may still be something you want to enforce but allowing a part-time job in Tesco might be ok) – the employee should seek your permission and should ensure they can be available if you ask them to carry out training or return from furlough. Contact us if you want to issue any such communication to your furloughed employees.
- It is still the case that the normal rules apply for maternity, paternity, adoption and shared parental leave & pay – if you have any employees in this situation who are asking to come back early and be furloughed give us a call
- It is still the case that if an employee is self-isolating due to coronavirus (either because they are sick or because someone in the household has it) they are eligible for SSP from day one – it is the intention of the HMRC that you will be able to claim back the first 14 days of SSP in this situation
- Once the employee is no longer required to self-isolate they can return to work (at your premises or home depending on your current business situation) or if you intend to furlough them you can do so at that point
- Employees who are in the “vulnerable” category (and anyone they live with) are being advised to maintain stringent social distancing – they are not required to self-isolate – you should discuss with them the best approach if they can’t work from home – contact us if you want to discuss your options
- Employees who are in the “high risk” or “extremely vulnerable” category will have had a letter from Public Health England or the NHS to advise they “shield” (i.e. stay at home) for 12 weeks – if they can’t work from home – there is some wording in the guidance which is causing some confusion – we knew before they could definitely receive SSP for the full 12 weeks – the guidance however now goes on to say that they can be furloughed if you would “otherwise have to make them redundant” – you could interpret this to mean that this applies if you have no work for them or that that this applies if you would have to make them redundant because you cannot sustain them not working for 12 weeks. Tricky! This is an easy decision if you were planning to furlough staff any way – simply prioritise the shielding employees. If you were not planning on furloughing any staff the general consensus seems to be that you can furlough the shielding employee anyway because the wording is so vague and it seems unlikely the Govt would want to penalise this group who are being told they must stay at home. If you are unsure give us a call and we can discuss
- Employees who “need to stay at home with someone” in the high risk category who needs to shield – as above for this group it also says they can be furloughed if they can’t work from home and you would “otherwise have to make them redundant” – again this is a matter of interpretation (and is different to what we understood before which was that this group only needed to stringently social distance – in fact the guidance regarding shielding itself has not changed on this point so it is still a little unclear). If you are unsure give us a call and we can discuss.
- Employees who are at home with children – you should discuss with them the feasibility of working from home (working flexible hours and sharing child care with a partner for example) and if this isn’t possible (either due to the work not being able to be done at home or due to childcare arrangements) the guidance states that employees with caring responsibilities (including but not restricted to their children) can be furloughed
Long update we know but hopefully it helps clarify a few points although unfortunately the wording in some paces is still a little vague and there are still unanswered questions about matters such as holiday!