Latest update on the Government Coronavirus job retention scheme
The key points are:
Employers can now claim for employees on the payroll on or before 19 March 2020 – not 28 February 2020 as previously published.
- Claims should only be made for employees who have been furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease”. Note that it is likely that employers will be asked to confirm that they understand that claims can only be made for this purpose when making a claim. Wrongly claimed sums must be returned to HMRC immediately.
- The employer must have agreed in writing (email is acceptable) with the employee that they will “cease all work in relation to their employment” whilst furloughed. Training activities agreed with the employee are excepted. Employees must not do work for anyone connected with the employer nor must they do work indirectly for the employer.
- Furlough pay will be based on “regular salary or wages” and will therefore not cover bonuses etc.
- Furlough payments cannot be claimed for salary which is “conditional on any matter” – so employers should ensure that furlough payments under any agreement are completely unconditional. This suggests that it is still permissible to agree with employees that payments can be deferred until HMRC payments are received.
- There is no further news about the treatment of annual leave so that we can assume that annual leave will work in the usual way which means that employees can expect to receive full salary (rather than 80%) for annual leave, including for bank holidays – and that annual leave will work in the usual way. So, employers will be able to require employees to take annual leave whilst furloughed if they give the required notice (essentially double the length of the leave period) and employees may book and take leave in the usual way.
- Furloughed company directors must not do more than comply with their statutory duties, such as filing company accounts.
- Employers can’t make claims for employees taking unpaid leave before or after 19 March 2020 – which could cover employees in the unpaid part of their maternity leave.
I am happy to check furlough leave agreements (including any already in place) to ensure that they are compliant with the above restrictions and to help anyone avoid clawback from HMRC and/or any allegations of fraud at a later date.
NEW Information released 17th April:
- The scheme has now been extended to 30 June 2020 (this was previously 31 May 2020).
- Employees can definitely take annual leave whilst furloughed – in which case employers will have to pay them 100% of their full pay. Employees could therefore ask for 100% of pay for bank holidays (so over the Easter break). However, some employees may not realise they are entitled to full pay for these days and others may be happy to accept the furlough rate if this is lower. We are still not completely sure whether employers can require employees to take annual leave whilst furloughed. Watch this space for more details ….
Employers can start the claim process for Government money to pay furloughed employees on Monday next week – 20 April. You will need your Government Gateway login details and must be registered for PAYE online – you can do this now if you haven’t already done so. You will also need names, NI numbers and furlough dates for your furloughed employees.
If you have any questions on the above please speak to Caroline Banwell at Harmony HR Solutions Ltd.