HMRC have indicated that the Coronavirus Job Retention Scheme (“Scheme”) will be up and running at some point between 20 – 30 April 2020. In preparation, on 15 April, the Government updated its Guidance and the Treasury issued a “Direction” on how the Scheme should be administered (links to these documents can be found below).
Whilst there still appears to be some areas of uncertainty, the Scheme has come on a long way since it was announced on 20 March 2020 and these documents are a must read for anyone looking to make an application under the Scheme.
There is obviously a lot of information to digest, but in terms of a few headlines:
• The Direction and the updated Guidance revise the date on which a furloughed employee must be registered on the employer’s PAYE payroll for the employer to be eligible to recover the employee’s wage costs through the Scheme. The date is revised from 28 February to 19 March 2020. This is good news for those that started after 28 February but only if they were paid on or before 19 March (which for many monthly paid employees would not have been the case). This also has implications for those employees that may have TUPE transferred after 28 February.
• The definition of a furloughed employee has been confirmed as an employee who has been instructed to cease all work for the employer for a minimum of 21 calendar days and the instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease. It is not limited to those who might otherwise have been made redundant.
• Employees that were employed as of 28 February 2020 and were made redundant or stopped working for an employer after that date but before 19 March 2020, can also qualify for the Scheme if the employer re-employs them and puts them on furlough. This requires a specific agreement to mitigate the risks of claims once the Scheme comes to an end.
• Employees who are were on unpaid leave on or before 28 February can only be furloughed from the date on which it was agreed they would return from unpaid leave.
• The Guidance suggests that employers can freely switch employees from long term sick leave to furlough, although the Direction appears to introduce further criteria limiting its application. We suggest that you take specific advice if you have and/or are contemplating furloughing anyone on long term sick leave.
• Employees cannot work for their employer or any linked organisations whilst on furlough and this must be agreed in writing between the Employer and Employee.
• Employees can undertake training directly relevant to their employment (which many are looking to utilise) however the Direction suggests that employees should agree any training in advance, in which case it would be good practice to have a paper trail to this effect.
• Those with fewer than 100 furloughed staff will be asked to enter details of each employee into the system – this will include their name, National Insurance number, claim period and claim amount, and it’s optional to enter payroll/employee number. Those with more than 100 or more furloughed staff will be asked to upload a file with the necessary information.
• The first batch of payments to employers is expected to be made from 30 April 2020. Going forwards, the aim is for payments to be made within 4 to 6 days of submission of a claim.
• The Scheme is still due to end on 31 May 2020, however the Government have left the door open to extend it.
• HMRC may audit employers and any fraudulent claims could result in criminal proceedings. Records of the agreements with staff and calculations applied should be kept for a minimum of 6 years. HMRC have also set up a whistleblowing line for non-compliant employers.
Some of the key areas we’re advising on which you may wish to consider include:
• the preparation of agreements recording the furlough arrangements as required under the Scheme;
• the interplay between sick leave / annual leave and furlough leave;
• mitigating the risks when re-employing staff for the purposes of furlough leave;
• eligibility of employees TUPE transferred on or after 28 February;
• eligibility of those employed on or after 28 February;
• conducting redundancy consultation with furloughed staff;
• interplay between furlough leave and notice pay.
This is only intended to be a summary and not specific legal advice.
If you would like further information about the Coronavirus Job Retention Scheme, or advice generally about managing your workforce during these unprecedented times, please do contact a member of our employment law team.