Coronavirus Job Retention Scheme
Further guidance & clarification for Employers following government guidance as of 1st May 2020.
HMRC Portal went live on 20th April 2020
The HMRC portal went live on 20th April 2020. Employers have already started to receive reimbursement grants despite initial guidance indicating that this may not happened for up to 4-6 weeks of the claim being received.
The calculation of Furlough pay is pretty straight forward and we advise you to seek advice from your payroll provider or accountant on this if you have any queries. (see below for government guidance and links)
Furlough to apply to all employees whose business is impacted by COVID-19
The government previously indicated that the Scheme was an alternative to redundancy, lay-off or unemployment. Although the guidance for Employees refers to Furlough as applying when the you are unable to operate or have no work for the employee to do, the latest guidance for Employers states that all Employers are eligible to claim under the Scheme and that the government acknowledges that different businesses face varying impacts from COVID-19.
The updated guidance makes clear that the Job Retention Scheme (Scheme) is “designed to help employers whose operations have been severely affected by coronavirus” and that employers that cannot maintain their current workforce because of this can make use of the Scheme.
In conclusion you are afforded discretion under the Scheme but you should be mindful about your application of the Scheme to your workforce as the government will if appropriate retrospectively audit you if they have reason to believe your claim is fraudulent. There is now a fraud reporting line in place which enables employees to whistle blow if for example they have been forced to work whilst furloughed.
A common question is whether you can use Furlough to top up an hours reduction – our view is that this is not the case. There is currently no part time furlough provision and employees should not be working or generating income for the business whilst Furloughed – you can on/off Furlough (for 3 weeks at a time) and you can redistribute work if that helps. You should not be Furloughing and insisting that employees carry out duties unless this is genuine volunteering (non-income producing) or training (*see further notes below).
Directors can furlough themselves and carry out limited duties – speak to us if you need advice as to what duties you can carry out.
In terms of documentation you should if at all possible have written agreement to furlough with any employees. You need to keep this document or evidence for 5 years. We suggest you file copies with your payroll so its easily found in the event of audit.
Annual Leave – Bank Holidays
It has now been confirmed that holidays can be taken during furlough leave and do not interrupt it.
Also employees who do take holiday during furlough should receive payment for these holidays and full pay for bank holidays.
ACAS has some great guidance which we would refer you to on this point and which can be found here:-
If you have concerns about paying employees full pay due to current financial constraints, you can refuse any requests for annual leave whilst the employees are Furloughed. As we have previously advised the government has amended the Working Time Regulations 1998 (WTR) so that four weeks’ annual leave can be carried over into the two future holiday years where employees have been prevented from taking annual leave due to Covid-19.
You could seek agreement to use with of employees to use annual leave whilst Furloughed rather than forcing them to take their holiday. It may be in the Employee’s interest as they will receive full pay however they may wish to keep hold of their holiday entitlement to be taken in the next two holiday years. Rollover provisions may need to be considered in more details alongside your options – we are happy to discuss individual circumstances if you wish.
Union Reps and disciplinary matters
It is now clear that “Whilst on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers.” This answers a question many had been asking about it not being a breach of furlough to accompany a colleague during disciplinary or grievance meetings, or redundancy consultation.
Directors paid once per year
We also now know that directors who pay themselves once a year (typically one-person businesses where most revenue is taken as dividends) are, subject to certain conditions, eligible for furlough.
We also now know that a new employer can claim under the scheme in respect of employees of a previous business who TUPE transferred after 28 February 2020;
You may find the relevant guidance you are seeking in one of the links below
Link to HMRC employer guidance: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
Link to HMRC employee guidance: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
Link to guidance on calculating 80% of wages: https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme
Link to guidance on how to claim: https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme
- Please note – this guidance is not intended to be taken as legal advice – for individual situations you will need to take specific legal advice.
- The information in this guide is correct as of 9th April 2020.
All advice given should be read alongside the Government Guidance
The Treasury has published on 1st May 2020 its Direction to HMRC giving statutory footing for the government’s self-employed income support scheme
We are all ready and able to help you if you have a query.
Director, Employment Solicitor and Mediator
Direct Dial 0113 8874670
Reception: 0113 3229222
Address: 4 Park Place, Leeds LS1 2RU
Direct Dial: 01138874673
Direct Dial: 0113 323 0346
Mobile: 07595 520 508
Direct Dial: 0113 8874674
We are here to help with all employment law matters that arise from the Coronavirus/Covid-19 lockdown.