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On 15 April 2020 the Treasury published the legal framework for the Coronavirus Job Retention Scheme (CJRS), which is in the form of a Treasury Direction under the Coronavirus Act 2020.
The Direction makes a number of important changes to the CJRS guidance issued by HMRC. The guidance was also updated on 15 April, but makes no reference to the Direction. It is not yet clear how the guidance is intended to interrelate with the Direction, although it is likely that the Direction will take precedence.
The key points of note in the Direction are:
- Employee consent: the Direction 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 guidance previously suggested that employers only needed to notify employees of their furlough in order to be eligible to claim under the CJRS, rather than seek their agreement. Employers must therefore 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 now 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.
- Payroll date: the payroll eligibility date for the CJRS has been changed from 28 February 2020 to 19 March 2020. This means that in order to access the scheme, the employer must have a PAYE payroll scheme registered on HMRC’s real time information (RTI) system on or before 19 March 2020 (although there are separate provisions for new employers following a TUPE transfer or a PAYE scheme reorganisation). It also means that an employee can be furloughed if an RTI submission notifying payment in respect of that employee has been made to HMRC on or before 19 March 2020 (and various other conditions are satisfied).
- Salary reference date: the reference date for calculating the claim for salaried employees has also changed; claims should now be based on the amount payable to the employee in the latest salary period ending on or before 19 March 2020. If, however, based on previous guidance, an employer has already calculated their claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020), the employer can still choose to use this calculation for their first claim.
- Training during furlough: the Direction also suggests (in a change from the guidance previously issued) that training won’t count as work during furlough provided that it is directly relevant to an employee’s employment, and agreed between the employer and the employee before being undertaken. Employers should bear this in mind when communicating with employees about what training they can undertake during furlough.
There are a number of issues which have still not been addressed by the Direction or the updated guidance, including the position on annual leave during furlough. There is also a possibility that the Direction and/or the guidance will be further amended in the coming days, and that the HMRC online portal for applying for CJRS grants may also provide clarity when it opens (which it is expected to do within the next few days).