[Guidance is changing quickly and this was correct at time of posting]
Friday 17th April 2020 was an important one in the short history of the Coronavirus Job Retention Scheme (CJRS). As it was the last day before the weekend it was not totally unexpected that that we would get a new HMRC guidance (as has been the case for the previous two weekends). However, we also got two new pieces of guidance. The sum total of what was published is as follows:
HMRC guidance for employers: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
HMRC guidance for employees: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
Guide to working out 80% of wages: https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme
The first link is, obviously, not guidance but an announcement that the scheme is extended to the end of June 2020. This announcement was not surprising as the lockdown was extended the day before but, more importantly, there were other factors, not specifically referred to in the announcement, that rather forced the Chancellor’s hand. If the possibility of furlough were to end on 31st May 2020 then employers would have to look at redundancies thereafter. For large employers seeking to dismiss 100 employees or more this would mean entering into collective consultations 45 day prior to the day that any dismissals may take effect. The count-back meant that such consultations would have had to start last weekend. The announcement has delayed that prospect but the same pressure point will only arise this time next month.
Once the announcement was made there had to be new guidance issued to reflect the extension (though there is still a reference to three months in the employee guide – drafting at speed can be problematic). In any event, with the HMRC portal opening today, it was also hoped that there would be some further clarification on matters.
If one adds the four pieces of guidance to the Treasury Direction issued on Wednesday 15th April 2020 (https://www.gov.uk/government/publications/treasury-direction-made-under-sections-71-and-76-of-the-coronavirus-act-2020 ) we now five documents to consider when trying to navigate the furlough scheme.
It remains the case that the Treasury Direction is at odds which the guidance in some very important ways. In some respects, the confusion continues because the latest guidance does not seek to fall fully in line with the Treasury Direction. It would be nice if there was some consistency, but it is uncertain as to whether this will be provided soon.
In this blog post my comments will be limited to the four pieces of guidance as issued on Friday without referring, too much, to the Treasury Direction. As the format for the guidance as changed considerably, I think it best to assist with some navigational pointers on these updates.
It is also possible that more information will be available now the HMRC portal is open. However, this is where we stand with the guidance at the time of writing.
Guidance for Employers as at 17th April 2020
This version is shorter than the one issued on 15th April 2020 as some of the text has shifted to the guide for working out the 80% (see below). We now have six main areas covered with a new section about what to do before you claim, however, this essentially restates elements that have been mentioned in previous guidance under the heading of “what you will need to make a claim”. The information is important for the preparations to be made for entering data on the portal.
The following warnings have also been added to the introductory text:
- “HMRC will check claims made through the scheme. 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.”
- “Dishonest or deliberately fraudulent claims put our essential public services and the protection of livelihoods at risk during these challenging times.”
- “HMRC has put in place an online for employees and the public to report suspected fraud in the Coronavirus Job Retention Scheme.”
The employee guidance refers to employees having an important role in such reporting. Employers will need to bear in mind that reports of fraudulent claims would most probably count as whistleblowing.
Where employees have been rehired after redundancy this guidance points out that they can be included in the scheme counting from the date upon which they were furloughed. The inference is that the period of furlough can only start after they are rehired and cannot be backdated.
The wording with respect to fixed term contracts has changed. The wording reflects what is common sense, in that if the contract is not extended then eligibility for the scheme stops with the natural termination of the contract and if they ended without extension or renewal before 19th March 2020 the employee will not qualify for any grant beyond that date.
The guidance says that consent to being furloughed should be confirmed in a way that is consistent with employment law for the claim on the scheme to be valid.
There is new wording about retaining records about all things relating to the scheme but that is something that goes without saying.
Guidance for Employees as at 17th April 2020
The first new element in this guidance refers to the reporting of fraud, with a link to the appropriate website. It is possible that reports will be made by employees who think they should have been included on the scheme when they may have been dismissed by reason of redundancy. As it is not compulsory to place employees on furlough as an alternative to dismissal then such assertions should not go far but the possibility of them being made cannot be ruled out.
The most important addition is with regard to holiday pay. It seems appropriate to mention the final sentence under this section first: “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.” In other words, things could change. With this is in mind any commentary has to come with a heavy health warning; this is only guidance, not law, and we cannot be totally sure what will come to pass. In general, this is an area that may not get fully settled until there is a litigated case or two.
The first statement on holiday is universally agreed. Holiday will accrue during furlough as per the contract unless varied by agreement.
The second statement, that holiday can be taken whilst on furlough, is something that is doubted by some prominent lawyers. There is wider acceptance that requested holidays can be taken but, at the same time, also some doubt as to whether an employer can impose holiday.
If it is assumed that holiday can be taken, then the rate of pay becomes relevant for those employers who are not topping up. The guidance refers to the payment being at the “normal rate of pay” with payment being in accordance with the Working Time Regulations 1998. Where employers are only paying as per the grant should “normal” be 80% or topped up to 100%? The guidance says that employers will be obliged to pay the additional amount over the grant amount. However, the guidance also says that employers will have the flexibility to restrict when leave can be taken if there is a business need. Query the business need when someone is on furlough, what difference would it make? Could the business need be to avoid different rates of pay during furlough? The guidance goes on to say that the business need stipulation applies to the furlough and the recovery periods. So, consideration about the taking of holiday could look at the impact of holiday (and the level at which it is paid) over a longer period. Bearing in mind the fact that this is all kept under review there is an argument that the limited guidance provided here has not really clarified much and, possibly, only added to the confusion.
We have just had two bank holidays and two more are due next month. So, what of them? The guidance says that if such days are normally worked then they can be included in the grant payment (i.e. they are normal working days). What if they are taken as leave? Then the employer is given a choice under the guidance; either they can “top up” the pay to “usual [not “normal”] holiday pay” or give the employee a day in lieu, presumably after the period of furlough.
The guidance is hedging its bets on the basis that it may be decided, through litigation, that holiday could not be taken during furlough. If that were to be the case then the rate of pay (topped up or not) is irrelevant because any holiday would be taken at the rate relevant after furlough (this may be different to prior to furlough if pay cuts are agreed).
If holiday is allowed to be taken (including bank holidays) then the guidance points to it being at the rate prior to furlough (the “normal” or “usual” rate). There is an argument that the “normal” rate is the prevailing rate (the 80% if agreement is reached at the level of the grant) but this is not the line taken in the guidance, which appears to build upon much of the commentary in the legal profession.
If an employer is topping up the 80% available under the grant then the only issue is whether holiday can be taken at all; and there is a still some doubt.
If an employer is not topping up then, if they do allow holiday, bearing in mind the doubt, then the indication is that it should be paid at the pre-furlough rate. To avoid any confusion on rate of pay the employer who is not topping up may want to look at not having holiday taken during the period of furlough, so as to avoid different rates being applied to different days. However, this could store up problems for the recovery period.
Guide to working out 80% of wages first issued on 17th April 2020
When looking at this area the concerns about how things fit in with existing employment law are lessened because HMRC are providing guidance on how to actually make a claim on the scheme it is running. They set the rules for the grant they are making, and this guidance restates what can and cannot be included in the calculation.
The first section is very short. It says to use the calculator that is on the portal. Hopefully, it will assist but there have been reports that it does not and has been withdrawn.
Next, the guidance sets out what should be included in the calculations, drawing in some of the text that used to be in the employer guidance.
When it addresses holiday pay it is basically tweaking the wording to address employers rather than employees (as addressed above).
In another sign that the drafters are constantly trying to catch-up with events, you will notice that the section that sets out the maximum amounts you can claim only deals with March, April and May. There is no mention of the extension through June.
By and large, the guidance provides examples of how to calculate the claims. Inevitably, with examples they will not cover all eventualities. If there are any specifics upon which you need assistance, then please call us on 0800 84 94 101.
Step by step guide first issued on 17th April 2020
This covers ground in the guidance immediately above and it is recommended that both documents are read alongside each other before trying to make a claim on the portal. Note that the application will have to be completed in one session with no save and return option. Sessions will also time out after 30 minutes of inactivity.
The examples in the guide are different from the guidance note and this may help in trying to fit your real-world situation to the application for the grant.
Where does that leave us?
None of this is particularly easy to follow, especially with guidance being provided in different forms and with so much about the application existing legal principles being unclear.
Most cases will be straightforward, but things can get complicated with those working variable hours, those starting and returning from maternity leave and those who were made redundant and are being brought back to then be furloughed.
Where things are not straightforward it best to be sure rather than swift. Checking and double checking the figures will be important bearing in mind the warnings about misuse.
Remember, only one claim can be submitted per pay period and a claim can be made in anticipation of a pay run.
SSP vs furlough
On Sunday 19th April 2020 HMRC changed their Statutory Payments Manual so that employees do not qualify for SSP if they are furloughed as part of the CJRS.
The third version of the guidance (dated 9th April 2020) introduced new wording which stated that the CJRS was not intended for short-term absences from work because of the three-week minimum period required for someone to be on furlough. However, it also said that employees on sick leave could be put on furlough; thus being classified as on furlough rather than on sick leave. In such circumstances the entitlement to SSP would cease. It was clear that the employee could only be categorised as sick or on furlough.
The guidance then went on to say that if a furloughed employee became ill, they must be paid at least SSP with the employer deciding whether to regard the employee as sick or on furlough. However, bearing in mind that the payments on furlough would be more than when on SSP there is little incentive to move to SSP from furlough.
The essential message was that SSP could not be claimed for an employee on furlough. The change to the Statutory Payments Manual has underlined this.
SSP and the extremely vulnerable
While addressing the subject of sick leave, now seems an appropriate time to update you on something away from CJRS but, nonetheless, connected to the coronavirus pandemic.
Regulation 2 of the Statutory Sick Pay (General) Regulations 1982 (SI 1982/894) (SSP Regulations) deems a person to be incapable of work for SSP purposes in certain circumstances.
The Statutory Sick Pay (Coronavirus) (Suspension of Waiting Days and General Amendment) Regulations 2020 (SI 2020/374) (SSP Suspension of Waiting Days Regulations) amended regulation 2 of the SSP Regulations and added a new schedule which deems that a person is incapable of work when they are isolating themselves because:
- They have symptoms of COVID-19, however mild, and are staying at home for seven days, beginning with the day on which the symptoms started (day 1).
- They live with someone who is self-isolating (as above) and are staying at home for 14 days, beginning with day 1.
- They are already self-isolating in accordance with the second bullet point (above), develop the symptoms of COVID-19, however mild, and are staying at home for seven days, beginning with the day the symptoms started.
While this provision was made on 27th March 2020 and came into force the following day it had retrospective effect for absences on or after 13th March 2020.
On 16th April 2020, the Statutory Sick Pay (General) (Coronavirus Amendment) (No. 3) Regulations 2020 (SI 2020/427) came into force. They further amend the schedule that the SSP Suspension of Waiting Days Regulations inserted into the SSP Regulations so that a person will also be deemed incapable of work when they are isolating themselves because:
- They are defined in public health guidance as extremely vulnerable and at very high risk of severe illness from COVID-19 because of an underlying health condition.
- They have been advised by a notification (sent to, or in respect of, them) that, in accordance with that guidance, they need to follow rigorously shielding measures for the period specified in the notification.
Thus, someone who is extremely vulnerable and shielding, can be regarded as sick even if they would not otherwise be regarded as sick.
It does not appear that these latest measures have the retrospective effect of the previous ones.
If you are still unclear on the right course of action in your particular circumstances, then call the Employment Law Team on 0800 84 94 101 and we will do what we can to help.