Tag: COVID-19 Guidance for Employers

On 13 November 2020, HM Treasury published its fourth Treasury Direction, which together with the previous Treasury Directions, form the legal framework for the CJRS (furlough scheme). We have updated our COVID-19 Guidance for Employers and provide a useful summary of the key differences.

We have updated our COVID-19 Guidance for Employers and provide a useful summary of the key differences between the pre-and-post extension that Employers should be aware of here: Coronavirus Support & Information.

Failing to ensure any previously issued furlough agreements meet the extended CJRS grant eligibility conditions could result in failed grant claims.

Here’s how to avoid making that simple mistake:

To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed or flexibly furloughed.

Employers must:

• make sure that the agreement is consistent with employment, equality and discrimination laws.

• keep a written record of the agreement for 5 years.

• keep records of how many hours their employees work and the number of hours they are furloughed (for example, not working), for 6 years.

The employee does not have to provide a written response and employers do not need to place all their employees on furlough.

The terms of any agreement must:

• reflect the hours the employee has actually worked or not worked over the period of the agreement.

• allow the employer to satisfy the terms of CJRS so they can make a claim in relation to hours not worked.

To ensure your staff remain eligible for the extended furlough scheme grant funding, you must ensure any previously issued furlough agreements meet the aforementioned conditions.  Provided they do so, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a CJRS claim.

If you’re not sure if your previously issued flexible furlough agreements meet the necessary criteria please contact us and we will review any previously issued agreements for you and provide further guidance to you thereafter.

Full guidance is due to be published next week, on 10 November 2020 and claims can be made from 11‌‌‌ November 2020.

Full details can be found here: HMRC Policy Paper

On 5 November 2020, the Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) will be extended until 31 March 2021 and it is more generous than the scheme running in September and October.

Until at least January 2021, Employers will be able to claim 80% of employees’ wages, capped at £2,500 for hours not worked. Employers must pay the national insurance and employer pension contributions on employees’ furlough pay. The percentage may be reviewed for February and March.

Full guidance is due to be published next week, on 10 November 2020 and claims can be made from 11‌‌‌ November 2020.

Key Points Confirmed by HMRC

From the HMRC Policy Paper, we know this much so far:

• The Chancellor confirmed that the CJRS applies to the whole of the UK equally. 

• Employers do not need to have used the CJRS previously and can claim whether their business is open or closed. 

• Employees can be fully or flexibly furloughed. 

• Employees must have been on the employer’s payroll on 30 October 2020, but do not need to have been furloughed previously. 

• Employees who were made redundant or stopped working for their employer after 23 September 2020 can be re-employed and claimed for under the scheme. 

• Employers will be able to claim for the period from 1 November from 8.00 am on 11 November 2020.

• Employees who have previously been furloughed continue to have their reference pay and hours based on the existing furlough calculations (as under the old scheme). 

• Employees who have not previously been furloughed will have a different pay/hours reference period. Full guidance will be provided on 10 November, but broadly the pay is based on 80% of the wages payable in the last pay period ending on or before 30 October 2020 (for those on fixed wages), or 80% of the average payable between the start date of their employment or 6 April 2020 (whichever is later) and the day before their CJRS extension furlough periods begins (for those on variable wages).

• Employees can be furloughed if they are shielding in line with public health guidance (or need to stay at home with someone who is shielding). That does not, of course, mean they have to be furloughed.

Eligibility for Extended Furlough Scheme

To be eligible for the grant, employers must have confirmed in writing to their employee (or reached collective agreement with a trade union) that they have been furloughed. The employee does not have to provide a written response. Also:

“Where consistent with employment law, any flexible furlough or furlough agreement made retrospectively that has effect from 1 November 2020 will be valid for the purposes of a CJRS claim as long as it is made according to the conditions above. Only retrospective agreements put in place up to and including the 13 November 2020 may be relied on for the purposes of a CJRS claim.”

What About the Job Support & Job Retention Schemes?

It was also confirmed that the Job Support Scheme has been “postponed”. It is not known whether it will be introduced after the CJRS ends.

The Job Retention Bonus has been deferred and a new retention incentive scheme will be deployed at a later date. A third grant for the self-employed will be available covering November to January of 80% of average trading profits up to a maximum of £7,500.

The UK Government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

Support for Employers

The COVID-19 lockdown restrictions and extension to the furlough scheme continue to present numerous and complex challenges for Employers. 

If you are an Employer and require advice and support on any employment matters, COVID related or otherwise, call us now on 0800 612 4772 or Contact us via our website and we will set assist you to navigate through the employment law minefield created by the COVID-19 crisis and comply with your legal obligations.

In light of the PM’s announcement on 30 October 2020, in which he confirmed the Coronavirus Job Retention Scheme (Furlough Scheme / CJRS) will be extended to 2 December 2020, the new Job Support Scheme (JSS) will now not start until the extended Furlough Scheme ends.  

The extension of the Furlough Scheme may create some confusion and concern for Employers who have already formally ended furlough and have implemented a formal short time working arrangement with employees.  For guidance on this point, Employers can look to the third Treasury direction, in which the Treasury confirmed the requirement to reach agreement on flexible furlough arrangements needs to be confirmed in writing by employers (which may be in electronic form such as an email). 

A literal interpretation of the Treasury direction would suggest that any formal agreement reached on short time working would mean employees returning to work under these arrangements would be eligible for the extended CJRS as being flexibly furloughed, but at the date of writing this we are still awaiting further guidance from the Treasury to determine what steps, if any, Employers will need to take with those employees they have entered into short time working arrangements with.

What the Treasury has confirmed so far is that the CJRS has been extended until December and will operate as the previous scheme did and the level of the grant will mirror levels available under the CJRS in August; so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions (NICs) and pension contributions only for the hours the employee does not work and that flexible furloughing will be allowed in addition to full time furloughing.

In addition, the Treasury has set out revised eligibility criteria and details of the support being provided:

Employers

• All employers with a UK bank account and UK PAYE schemes can claim the grant. Neither the employer nor the employee needs to have previously used the CJRS.

• The government expects that publicly funded organisations will not use the scheme, as has already been the case for CJRS, but partially publicly funded organisations may be eligible where their private revenues have been disrupted. All other eligibility requirements apply to these employers.

Employees

• To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.

*As under the current CJRS rules:

• Employees can be on any type of contract. Employers will be able to agree any working arrangements with employees.

• Employers can claim the grant for the hours their employees are not working, calculated by reference to their usual hours worked in a claim period. Such calculations will broadly follow the same methodology as currently under the CJRS.

• When claiming the CJRS grant for furloughed hours, employers will need to report and claim for a minimum period of 7 consecutive calendar days.

• Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

• For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts.

What support is being provided and employer costs:

• For hours not worked by the employee, the government will pay 80% of wages up to a cap of £2,500. The grant must be paid to the employee in full.

• Employers will pay employer NICs and pension contributions and should continue to pay the employee for hours worked in the normal way.

• As with the current CJRS, employers are still able to choose to top up employee wages above the scheme grant at their own expense if they wish.

• The Government will confirm shortly when claims can first be made in respect of employee wage costs during November, but there will be no gap in eligibility for support between the previously announced end-date of CJRS and this extension.

Full details of the latest Treasury update can be found here:  https://www.gov.uk/government/news/furlough-scheme-extended-and-further-economic-support-announced

Support for Employers

If you require any advice or support, please contact our team of employment law specialists to get clear and purposeful advice.

Book your FREE Consultation Now or call us on 0800 612 4772 to speak to a specialist today.