When we published our blog on 15 April 2020, we stated rather boldly that the issue of the Treasury Direction (formal title: The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction) on 15 April 2020 was likely to the definitive guide on how the Job Retention Scheme (JRS) works. Friday’s flurry of updates however disproved that. Further guidance has been issued which now confirms the following:
Extension of 31 May 2020 Deadline
- The JRS scheme has been extended to the end of June 2020.
- It is anticipated that this is because Friday was the deadline by which many employers who would otherwise have had to make redundancies, would have had to have started the collective consultation process if 99 or more staff were affected (see previous blog here).
Confirmation of Opening of On-Line Portal on 20 April 2020
- This has been confirmed and the Step by Step guide issued on Friday 17 April 2020 (see below) confirms that payment will be made 6 working days after making the application.
Consent Confusion Resolved?
- As we reported in our blog of 15 April 2020, the Treasury Direction (which is the effective legislation on the JRS, unlikely Government ‘guidance’) provided that the employee must have been instructed by their employer to cease work and this must have been agreed in writing.
- This was contrary to Government Guidance issued to that point which had only made reference to notifications to employees being in writing and being kept for 5 years.
- In the circumstances, there was an immediate concern that for employers who had simply notified their employees that they would be on furlough, would be denied the JRS grant (or would be subject to clawback claims from HMRC) because they did not have agreement in writing with the employees. It seemed that there may well have been an opportunity to ‘put this right’ be seeking retrospective consent from the employees (given that the scheme can be back dated to 1 March if employees stopped working, where the scheme was not announced until 23 March, there must be a recognition of ‘backdating’ consent), but for a large employer with numerous employees over different locations, this would not have been logistically straight forward and if some employees saw this as an opportunity to leverage some additional benefit, could introduce further delay. There was much talk of Judicial Review applications, challenging any requirement for written consent from the employees and there is no doubt that a fundamental aspect of the JRS had been thrown into confusion (as if there wasn’t enough already).
- Further HMRC guidance sought to address this on Friday evening (5th version of the HMRC guidance). The published update states that employers must confirm in writing to their employees that they have been furloughed and if that is done in accordance with employment law, then that will constitute valid consent for the purposes of the scheme. It specifically states that the employee does not have to provide a written response. That clarification was written with the benefit of and an awareness of the concerns raised by the ‘consent requirement’ in the Direction and was presumably intended to address that question. However, guidance does not ‘out trump’ the legal effect of the Direction and any clarity it was thought was being given was undermined by a ‘Step by Step’ guide issued also (see below) detailing how to make a claim for the JRS grant which states ‘an employer must agree with the employee that they are a ‘furloughed worker’.
- The guidance issued to employees (not employers) was also updated on Friday evening to clarify that holiday can be taken during furlough but if taken, the employee must be paid their usual pay in accordance with the Working Time Regulations 1998 and that employers will be obliged to pay the additional amounts over the amount of the JRS grant.
- The most recent guidance also confirms that employers have the flexibility to restrict when leave can be taken if there is a business need.
How to Claim
- A step by step guide has been published (https://www.gov.uk/government/publications/coronavirus-job-retention-scheme-step-by-step-guide-for-employers). This confirms that the information you need will be:
- The number of employees being furloughed
- The dates employees have been furloughed to and from
- Details of employees – the name and National Insurance Number of each furloughed employee
- The employer’s PAYE scheme reference number
- The employer’s Corporation Tax Unique Taxpayer Reference, Self-Assessment Unique Taxpayer Reference or Company Registration Number as appropriate
- The Employer’s UK bank account details
- The Employer’s organisation’s registered name
- The Employer’s address
- For each employee, the total amount being paid to the employee, the total of the employer NIC and total of employer pension contributions up to 3% (on qualified earnings – see earlier blog here)
- Employers will also need to register on the portal and obtain a Gateway ID and password.
- Employers with more than 100 staff will also have to provide the ‘claimed’ amount for each furlough employees and the claim period for each employee.
- Guidance has also been issued on how to work out 80% of wages which can be claimed: see https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme
We will continue to monitor the situation and provide further updates as they become available. The guidance is changing almost daily and as such it is important to monitor updates as further clarification is published. Please contact Linky Trott or any member of the Employment team.
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Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
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