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HMRC issued a further revised version of their guidance for employers and employees on the Coronavirus Job Retention Scheme (CJRS). The main change reflects the fact that HMRC have now issued separate guidance on how to calculate 80% of employees’ wages, National Insurance Contributions and pension contributions for the purposes of a claim under the CJRS (the ‘wages guidance’). There is also a new step by step guide for employers on making a claim under the CJRS.
Holiday during furlough
The wages guidance contains a section on holiday pay, which confirms that:
- Furloughed employees continue to accrue holiday as per their employment contract.
- Employees can take holiday whilst on furlough.
- If a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations. This means that holiday pay should be paid at 100% of normal salary, and that employers will be obliged to pay additional amounts over the CJRS grant.
- Employers will have the flexibility to restrict when leave can be taken if there is a business need, both during furlough and when employees return to work.
This is broadly in line with the position most employers had adopted on holiday during furlough. However, this section of the wages guidance concludes with the statement that “During this unprecedented time, [HMRC] are keeping the policy on holiday pay during furlough under review.” Employers should therefore bear in mind that, as with many aspects of the CJRS, there is scope for further change here.
Employee agreement
As noted in our previous email, the Treasury Direction on the CJRS states that in order to be classified as a “furloughed employee”, the employer and employee must have “agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment”.
The updated employer guidance contains no reference to the Direction. However, it includes the following statement (the new text is highlighted below):
“To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.”
This section seem to be inconsistent with the Direction, which explicitly requires “agreement in writing”. It is also inconsistent with the step by step guide, which states that:
“To be eligible for CJRS an employer must agree with the employee that they are a ‘furloughed worker’. Employees must be notified that they have been furloughed.”
Since the Direction has the force of law, but the guidance does not, our view remains that, as advised in our previous email, employers should ensure that they seek and obtain written agreement from employees (although this can be in simple form such as an email or text message). This will include those employees who have already been furloughed on the direction of the employer, who should be asked to confirm their agreement to cease all work in relation to their employment and that this agreement is valid with effect from the earlier date on which they were designated as furloughed. There remain questions as to how to deal with this practically, including treatment of non-responders and dissenters, and the question of retrospective effect. Employers should seek advice on their individual circumstances.
Other points of note
The rest of the wages guidance broadly reflects the previous content of the employer guidance, although it has now been expanded to include various worked examples. Other points of note include:
- The online portal for making CJRS claims will be available on 20 April 2020
- Employers must claim for all employees in each period at one time – changes cannot be made to a claim once submitted
- Claims can be made in anticipation of an imminent payroll run, at the point the employer runs payroll or after payroll has run
- There is also guidance on how employers should treat grant payments in RTI
Finally, there is reference in both the employer and employee guidance to a separate online portal for employees and the public to report suspected fraud in the CJRS. The guidance makes it clear that payments may be withheld or need to be repaid in full to HMRC if the claim is based on dishonest or inaccurate information or found to be fraudulent.