Coronavirus Job Retention Scheme - Advice for Employers

17 April 2020

Under the Coronavirus Job Retention Scheme, all UK employers with a PAYE scheme created and started on or before 19 March 2020 are able to access support to continue paying part of their employees’ salaries for employees who would otherwise have faced redundancy due to the crisis.

Read our latest update here

Employees who are not required to work but who are being retained on the payroll are described as “furloughed workers”. Employers are free to consider allocating any critical business tasks to employees who are not furloughed.

Since our last update there have been a number of updates with some quite fundamental changes:

  • The reclaim Portal is now open and seems to be working as well as can be expected given the volume of claims.
  • Future claims are expected to be processed and paid within 4 – 6 days.

The qualification criteria has been extended to cover employers with:

  • a PAYE payroll scheme on or before 19th March 2020 (previously 28th February), and
  • includes employees details sent to HMRC in an RTi submission notifying a payment in respect of the employee on or before 19th March 2020.
  • The CJRS itself has been extended to the end of June 2020, now 4 months starting from 1st March 2020. One aspect of this relates to potential redundancies as for an employer with 100 or more employees there is a statutory 45 days’ collective consultation period.
  • Employers who have already furloughed employees with a furlough end date of 31st May 2020 will need to write to their employees again, at the appropriate time, prior to 31st May if they wish to gain their agreement to extend the furlough period past that date.
  • Employers who are gaining employees’ agreement on a three-weekly basis can continue to do so.
  • A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 19th March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.
  • Foreign nationals are eligible to be furloughed.
  • A written record by the employer of the furlough decision and notification is required and must be kept for 5 years, BUT employees do not have to provide a written response under the scheme rules.
  • However, from an employment law perspective we would advise that it is better to get an employee acknowledgement and agreement where possible.
  • Apprentices can be furloughed in the same way as other employees and they can continue to train whist furloughed.
  • Individuals can furlough employees such as nannies provided they pay them through PAYE and they were on their payroll and notified on RTI to HMRC on, or before, 19th March 2020.
  • Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the CJRS.
  • Short term illness/ self-isolation is not a consideration in deciding whether to furlough an employee. If employers want to furlough employees and they are currently off sick, they are eligible to do so.
  • Employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) and who are unable to work from home and you would otherwise have to make them redundant can be furloughed.
  • Employees can take holiday whilst on furlough. Under Working Time Regulations holiday pay is to be paid at the employee’s normal rate of pay or average  pay in the previous 52 working weeks.
  • Bank holidays – if an employee usually:
  • Works them – you can agree they are included in the grant payment
  • Takes as holiday - either top up to usual holiday pay amount, or give a day in lieu.
  • Any employees you place on furlough must be furloughed for a minimum period of 3  consecutive weeks. Employees can be furloughed multiple times, but each separate instance of furlough must be for a minimum period of 3 consecutive weeks.
  • If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.
  • As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE:
    • office holders (including company directors)
    • salaried members of Limited Liability Partnerships (LLPs)
    • agency workers (including those employed by umbrella companies)
    • limb (b) workers
  • Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged
  • necessary for that purpose. This also applies to salaried individuals who are directors of their own
  • personal service company (PSC).
  • When calculating 80% of employees’ wages use the regular payments you are obliged to make, including:
    • regular wages you pay to employees
    • non-discretionary overtime
    • non-discretionary fees
    • non-discretionary commission payments
    • piece rate payments
  • You cannot include the following when calculating wages:
    • Discretionary payments – where the employer was under no contractual obligation to pay, including:
      • tips
      • discretionary bonuses
      • discretionary commission payments
      • non-cash payments
      • non-monetary benefits e.g. benefits in kind and salary sacrifice schemes that reduce taxable pay
  • HMRC agrees that the COVID-19 / coronavirus outbreak counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
  • Both the Apprenticeship Levy and Student Loans should continue to be paid as usual. Grants from the CJRS do not cover these.
  • Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they are written to confirming their furloughed status.
  • All of the grant received must be paid to employees in the form of money. No part should be netted off to pay for benefits or salary sacrifice.
  • The employer can choose the calculation they think best fits the way employees are paid. HMRC will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice of approach is made.
  • After submitting the claim the employer should:
    • note the claim reference number - no SMS / email confirmation will be provided
    • retain all records/ calculations claims – HMRC may need to contact you about them
    • expect funds six working days after application, provided your claim matches records that HMRC hold for your PAYE scheme
  • 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..

Next steps 

  1. Establish base pay that qualifies for 80% furloughed grant
  2. Identify employees where the £2,500 cap will apply
  3. Ensure proper communication and, where applicable, agreement with all furloughed employees
  4. Implement changes to payroll and pay elements etc.
  5. Prepare calculations for application to HMRC
  6. Register and log-on to new HMRC Portal 
  7. Submit required information to HMRC
  8. Receive reimbursement via new system 

The overall message, however, is that the Government will provide assistance to both employers and employees. They are urging businesses not to make permanent redundancies.

If you have any queries, or would like to discuss your requirements for the next step, please contact:

Get in contact

We are here to help you with all aspects of the JRS process. From analysis of employees to be furloughed to the formal claim process. Please speak to your normal MHA MacIntyre Hudson contact or:

Nigel Morris, Employment Tax Director, nigel.morris@mhllp.co.uk, Tel: 07718 340634
Richard Maitland, Employment Tax Partner, Richard.maitland@mhllp.co.uk, Tel 07711 373584
Stephanie Pote or Colin O’Kane, Senior HR Consultants, HRSolutions@mhllp.co.uk

The above guidance is provided for your information and is our summary of the latest position as we see it.  You should seek appropriate legal and technical advice in relation to your own specific circumstances before acting on the above.

Please also note that Government advice is being updated on a daily basis.

If you are concerned about being impacted financially due to the Coronavirus, we are here to support you or if you require more specific advice on your situation and how the COVID-19 pandemic may affect your business. Reach out to discuss how we can help. https://www.macintyrehudson.co.uk/spotlight-on/covid-19-update