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CJRS: Claiming for Employees Serving Their Notice

Posted on 9 July 20207 June 2023 by @deliver_els

Although the CJRS has now been extended to 31 October 2020, the government has made it clear that it will expect employers to make a financial contribution towards furloughed employees’ furlough pay from 1 August 2020. Furloughing employees beyond that date will therefore come at a cost to employers and many are considering whether they can afford to retain all employees going forward.

CJRS: Claiming for Employees Serving Their Notice

There may therefore still be fair reasons for employers to make furloughed employees redundant despite the extension of the scheme but the latest (third) Treasury direction appears to introduce a new requirement which is arguably designed to prevent the use of CJRS funds.

Can an employer make employees on furlough redundant?

We have confirmed in previous bulletins that the Employees’ CJRS guidance states that an employee can be made redundant while on furlough or afterwards, and that an employee’s redundancy rights will not be affected by being furloughed. However, an employer cannot claim reimbursement of redundancy payments under the scheme (Employers’ CJRS guidance).

The position in respect making furloughed employees redundant and not being able to claim reimbursement of redundancy payments under the scheme has not change, but the latest (third) Treasury direction appears to introduce a new requirement which is arguably designed to prevent the use of CJRS funds to pay employees working under notice.

Claiming through the CJRS for redundant employees

Although the guidance seems to confirm that a furloughed employee may be made redundant, there has been criticism of employers that have taken this approach. The aviation minister, Kelly Tolhurst, suggested in response to British Airway’s decision to dismiss employees on furlough that the Treasury should review the CJRS to ensure that it is not used to pay the wages of employees on redundancy notice (although the criticism may have been based on the fact that it appears that the dismissals were with a view to offering new roles with inferior terms).

On 29 June 2020 the Secretary of State for Work and Pensions expressed similar concern about the use of CJRS funds as a means of paying wages without an intention to keep the relevant employees employed.

The third Treasury direction appears to introduce a new requirement which is arguably designed to prevent the use of CJRS funds in this type of situation. Paragraph 2.2 states that a claim should only be made where the payment will be used to continue employment. This suggests that it would be contrary to the purpose of the scheme to use the funds where employment has been terminated and the employee is working under notice.

The schedule to the third Treasury direction states that the previous Treasury directions continue to have effect subject to the modifications in the schedule. It appears that the Third treasury direction is intended to have retrospective effect, although this is not entirely clear.

Employers may take some comfort from the comments of the Financial Secretary to the Treasury on 8 July in response to a question in Parliament on this issue. He responded that employers are permitted to continue to claim under the scheme for a furloughed employee where they are serving their notice period. However, this is not reflected by the wording of the third Treasury direction and has not been expressed in writing by HMRC or the government.

Whereas previously and based on the earlier iterations of the Treasury direction, we would have been comfortable advising Employers that they could continue to claim under the scheme for a furloughed employee where they are serving their notice, we would now, in light of the latest (third) Treasury direction, recommend that Employers intending to use CJRS funds to pay employees working under notice should contact HMRC for guidance and would advise against doing so unless or until they receive confirmation from HMRC that they can.

Support for Employers

The COVID-19 pandemic and associated furlough scheme continues to present numerous and complex challenges for Employers.

If you are an Employer and require advice and support on extending full furlough, introducing flexible furlough, or are contemplating a restructure/reorganisation and/or redundancies as a result of the ongoing COVID 19 restrictions, call us now on 0800 612 4772 or Contact us via our website and we will set out clear options for you to help ensure you comply with your legal obligations.

Flexible Furlough – New Treasury Direction Published

Posted on 2 July 20208 June 2023 by @deliver_els

The Chancellor has produced a third iteration of the Treasury Direction in relation to the Coronavirus Job Retention Scheme (CJRS) and this was published on Friday 26 June 2020. The new Direction sets out the rules that will apply under the amended CJRS from 1 July 2020, which allows for ‘flexible furlough’ arrangements, until 31 October 2020, when the scheme ends.

Flexible Furlough – New Treasury Direction Published

Third Treasury Direction on the UK Coronavirus Job Retention Scheme

The updated Treasury Direction which legally underpins the Coronavirus Job Retention Scheme (CJRS) and which can be read here, sets out the rules that will apply under the amended CJRS from 1 July 2020. The new rules allow for ‘flexible furlough’ arrangements, until 31 October 2020, when the scheme ends. In summary the Treasury Direction largely reflects the recent Guidance and clarifies a number of points:

Flexible furlough

From 1 July to 31 October, employers are permitted to use the CJRS flexibly. This means the scheme enables part-work/part-furlough. Employers can claim under the scheme for time furloughed and will have to pay employees normally for time spent working.

Cut-off dates

The new Direction confirms that the cut-off date for making claims under the original CJRS, as set out in the previous Directions and in force until 30 June, is 31 July.

It also confirms that a business will only be able to participate in the amended CJRS that applies from 1 July if it has made a claim under the original scheme by 31 July in respect of an employee who has been furloughed for a minimum of three weeks beginning on or before 10 June.

From 1 July, the scheme is changing from month to month. Although more than one claim can be made in a month, a claim must start and end within the same calendar month and must relate to seven or more consecutive days. An exception to the seven-day claim period is made for “orphan periods” at the beginning or end of a month.

Maximum number of employees you can claim for

The number of employees who can be claimed for post 1 July cannot exceed the maximum number in any one claim made for furlough periods prior to 1 July – the new Direction refers to this as the “high-watermark number”.

Exceptions to 10 June cut-off and “high – watermark number”

The new Direction confirms the exception to the 10 June cut-off and the “high-watermark number” for family leave returners and armed forces reservists. There is a similar exception where a TUPE transfer takes place after 10 June 2020, in relation to transferring employees who were furloughed by the transferor under the original CJRS (but who cannot satisfy the 10 June cut-off as regards the transferee). The Direction confirms that the number of these previously-furloughed, transferring employees is added to the transferee’s cap in the same way as “returning employees”.

Financial support for employers

The financial support for employers will not change until 1 August 2020. From 1 August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.

From 1 September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.

From 1 October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.

Requirement to reach an agreement on flexible furlough

In our previous bulletin, analysing the recent Guidance on flexible furlough, we referred to the fact that the Guidance is not clear whether the agreement to flexible furlough needs to be full written agreement with employees as opposed to written confirmation / letter as has been applicable for full furlough.

The new Direction confirms the requirement to reach agreement on flexible furlough arrangements but says that the agreement only needs to be confirmed in writing by employers (which may be in electronic form such as an email). Therefore, any flexible furlough arrangements require communication and letters/ emails to employees to evidence agreement. A record of the agreement must be retained by the employer until at least 30 June 2025. As with full furlough, the agreement for flexible furlough can be by means of a collective agreement.

Employers should note that there is a new requirement that the agreement must have been made before the beginning of the period to which the CJRS claim relates – and must not be made retrospectively. However, the Direction confirms that an agreement can subsequently be varied.

Calculating wages

The Direction provides various examples of how to calculate employee wages based on usual hours and hours worked, to determine how much can be claimed under the CJRS.

The requirements are not straightforward and will have to be worked through carefully especially if the claim period does not align with a calendar month. To align with a calendar month, a furlough period may have to start mid-week. In all other cases (for example, if a furlough period started on Monday 6 July), the complex flexible furlough calculations will have to be undertaken. The government has worked through some examples and has updated its calculator on the gov.uk website to assist with hours calculations to claim the CJRS grant.

If you are considering bringing back your workforce part-time, we recommend you start planning and discussing with employees as soon as possible. Bear in mind that some employees will have childcare issues and others may be shielding or live with someone who is shielding. The government expects employers to be understanding and flexible with employees in these situations.

Purpose of CJRS / redundancy

One point on which urgent clarification is being sought is that the new Direction now says that the purpose of the CJRS is to “continue the employment of employees” which begs the question can it be used to pay notice pay or any costs associated with termination of employment? This new wording appears to contradict the Employee Guidance on the CJRS which still states, “your employer can still make you redundant while you are on furlough”. HMRC have apparently referred this question to a specialist team.

This is clearly of significance to some employers who are presently exiting people or are planning to and we will of course keep it under review.

Support for Employers

Chancellor announces more details about extension to the Furlough Scheme

Posted on 30 May 20207 June 2023 by @deliver_els

Yesterday (29‌‌ May) the Chancellor announced more details about the extension to the Coronavirus Job Retention Scheme (CJRS), the key details being as follows:

Chancellor announces more details about extension to the Furlough Scheme

Flexible furloughing

From 1‌‌ July 2020, Employers have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.

Employers can decide the hours and shift patterns that your employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that Employers can furlough staff for.

Any working hours arrangement that Employees agree with their employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, Employers will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if they prefer. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered.

in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work.

in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed.

in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500.

in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500.

the cap on the furlough grant will be proportional to the hours not worked.

If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.

Self-Employed Grant Scheme Extended

In addition, the Chancellor also announced the self-employed grant is being extended, with applications opening in August for a second and final grant. There will be parity with the reducing furlough scheme, paying 70% (not 80%) of average earnings up to £6,750/

Important dates for Employers

It’s important to note that the scheme will close to new entrants from 30‌‌ June. From this point onwards, Employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30‌‌ June.

This means that the final date that Employers can furlough an employee for the first time will be 10‌‌ June for the current three-week furlough period to be completed by 30‌‌ June. Employers will have until 31‌‌ July to make any claims in respect of the period to 30‌‌ June.

At the date of this announcement we are still awaiting updates to the Treasury Direction and the Employer’s Guidance and therefore this information provided by the Chancellor in his press conference should be taken with a degree of caution until the full details are published, but these headline points announced should enable Employers to start planning for the coming weeks and months.

Ending Furlough

With this additional clarity form the UK government and lockdown restrictions easing across the UK, many employers will want to start planning what a return to work from furlough might look like. To assist Employers, we have added a new section to our COVID-19 Furlough FAQs – RETURNING TO WORK FROM FURLOUGH and further guidance on our blog.

https://employmentlawservices.com/ending-furlough-what-employers-need-to-know/

Support for Employers

If you are an Employer and require advice and support on the various steps you need to take to end furlough correctly, call us now on 0800 612 4772 or Contact us via our website and we will set out a clear, step by step plan you can follow to to help ensure you comply with your legal obligations.

Furlough Scheme Extended to October 2020

Posted on 12 May 20201 November 2023 by @deliver_els

The Chancellor Rishi Sunak has today announced the Coronavirus Job Retention Scheme (CJRS) will be extended for four months, until the end of October 2020 but in doing so, he said he will ask companies to start sharing the cost of the scheme from August 2020.

Furlough Scheme Extended to October 2020

Until the end of July, there are no changes, which will be warmly welcomed by the devolved administrations of Scotland, Wales and Northern Ireland who, unlike England, have not yet decided not to relax lockdown restrictions.

Although the scheme will continue for all sectors and regions until October, the Chancellor announced that from August to October 2020, the scheme will continue on the basis furloughed employees can be brought back part-time.

Full details will be published by the end of May.

With this additional clarity form the UK government, now is the ideal time for employers to start planning what a return from furlough might look like. To assist Employers, we have added a new section to our COVID-19 Furlough FAQs – RETURNING TO WORK FROM FURLOUGH.

Support for Employers

If you are an employer and require advice and support on any employment related matter, COVID-19 or otherwise, call us now on 0800 612 4772 or Contact us via our website.

Disciplinary & Grievance Procedures During COVID-19 Lockdown

Posted on 7 May 20207 June 2023 by @deliver_els

In early May 2020, Acas published Disciplinary and grievance procedures during the coronavirus pandemic which states that existing employment law and the Acas Code of Practice on Disciplinary and Grievance Procedures (the Acas Code) continue to apply during the COVID-19 pandemic.

Disciplinary & Grievance Procedures During COVID-19 Lockdown

The guidance notes that it is for an employer to decide if it would be fair and reasonable to carry on with, or start, a disciplinary or grievance procedure while an employee is furloughed, social distancing and other public health guidelines are being followed, or an employee is working from home. It suggests some practical measures that employers can take, depending on whether a workplace is open or not.

The guidance states that a furloughed employee can take part in a disciplinary or grievance investigation or hearing however, the participation must be voluntary (an individual must be “doing it out of their own choice”) and take place in accordance with current public health guidance.

Employers Must Proceed Cautiously

It is unclear how the Acas guidance should be read alongside the HMRC guidance and the Treasury direction, which require employees to cease all work in relation to their employment during furlough. Arguably, acting as a meeting chairperson, notetaker or even a witness could amount to “work” for the purposes of paragraph 6.1 of the Treasury direction and is providing a service for the employer contrary to the Employers’ CJRS guidance. Accordingly, following the Acas guidance could mean that an employer is unable to claim for reimbursement of an employee’s wages under the CJRS.

In practice, similar principles will apply to those that are relevant when an employee is on sick leave.

We provide detailed guidance in our Furlough Scheme FAQ’s, in the “Activities During Furlough” section.

Support for Employers

If you are an employer and require advice and support on any employment related matter, COVID-19 or otherwise, call us now on 0800 612 4772 or Contact us via our website.