On April 4, April 9, and April 15, 2020, Her Majesty’s Revenue and Customs (HMRC) updated the guidance for employers on the Coronavirus Job Retention Scheme (CJRS). The updates aimed to clarify issues and answer questions asked since the initial guidance was published on March 26, 2020. In addition, on April 15, 2020, Her Majesty’s Treasury (HM Treasury) issued a Direction to HMRC under powers conferred by the Coronavirus Act 2020, containing the legal framework and instructions for making payments under the CJRS. This is likely to be the definitive guidance on how the CJRS works. However, despite the recent updates, there are issues that remain unclear. We have outlined both the updated guidance and the outstanding issues below.

Updated CJRS Guidance

Rehiring Employees and Placing Them on Furlough Leave

The guidance now makes it clear that if an employee has ceased employment with a business for any reason on or after February 28, 2020, the individual can be reemployed and placed on furlough leave. This includes an employee who has been dismissed or who resigned on or after that date, as long as the employee was on the payroll on or before February 28, 2020. This applies even if the employee is not reemployed until after March 19, 2020.

Eligible Employees Under CJRS

Employers may only claim for furloughed employees who were on the “Pay As You Earn” (PAYE) payroll scheme on or before March 19, 2020, and who were notified to HMRC on a Real Time Information (RTI) submission before March 19, 2020.

“Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts.” Further guidance has been given in relation to other groups if they are paid via PAYE (for example, company directors, and salaried members of Limited Liability Partnerships).

It is also now clear that employees who “are shielding in line with public health guidance” can be furloughed and access the CJRS. Employees who are unable to work due to caring responsibilities resulting from the COVID-19 situation may also be furloughed.

Commissions, Benefits, and Salary Sacrifice

The guidance issued on March 26, 2020, explained that fees, bonuses, and commissions would not be included in the furlough payment; however, this appears to have been modified, as the updated guidance now states that employers can claim for “any regular payments [they] are obliged to pay employees.” “This includes wages, past overtime, fees and compulsory commission payments” (meaning contractual commission payments). “However, discretionary bonuses (including tips), discretionary commission payments and non-cash payments” are not included.

The updated guidance also confirms that the furloughed payment “should not include the cost of non-monetary benefits provided to employees.” This includes taxable Benefits in Kind (for example, health insurance or a company car). If an employer chooses to provide benefits to a furloughed employee, this “should be in addition to the wages that must be paid under the terms of the [CJRS].”

Multiple Periods of Furlough Leave

The updated guidance makes it clear that employees can be furloughed multiple times. An employer may rotate employees on and off furlough leave; however, each separate instance must be for a minimum duration of three weeks.

Working for Another Employer While on Furlough Leave

If an employee has two jobs, the updated guidance confirms that the employee can still work for one employer while being on furlough from the other. Each job is separate, and a £2,500 gross-per-month cap applies to each employer individually; therefore, a furloughed employee working two jobs, both of which are high earning, could potentially receive £5,000 gross furlough pay per month.

Statutory Sick Pay (SSP)

The updated guidance states that employees on sick leave or self-isolating as a result of COVID-19 are entitled to SSP and makes it clear that the CJRS is not intended for short-term absences from work due to sickness (hence, the three-week minimum furlough period).

With regard to employees on long-term sick leave or those that are being shielded, it is at the employer’s discretion as to whether they are furloughed. Though it is possible for an employer to claim back from the CJRS and the SSP rebate scheme for the same employee, it is not possible to do so during the same period. The guidance advises employers that if a non-furloughed employee becomes ill, needs to self-isolate, or needs to be shielded, an employer may qualify for the SSP rebate scheme, which enables the employer to claim up to two weeks SSP per employee. An employer can only reclaim expenditures through the CJRS when an employee is furloughed.

Notice

We already know from previous guidance that employers must notify employees that they are going to be placed on furlough leave; however, the new Direction from HM Treasury requires a written agreement. The updated guidance states that to claim furlough, the employer and the employee must have agreed in writing that the employee will cease work and the employer must retain the written record for five years.

Business Transfers and TUPE

The updated guidance confirms that if employees have transferred to a new employer pursuant to the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) after March 19, 2020, the new employer is able to place the employees on furlough leave and make a claim under the CJRS in respect of those furloughed employees.

Immigration Status

Employees on some work visas will not be regarded as breaching their visa conditions if they receive funds under the furlough scheme; grants under the CJRS are not considered as “access to public funds.” The updated guidance confirms that employers can furlough foreign national employees.

Unresolved Issues

Annual Leave

On April 9, 2020, HM Treasury confirmed in a tweet that guidance on the holiday issue in relation to the CJRS would be issued this week and that employers should keep their approach to holiday and holiday pay for those employees who are furloughed under review. Unfortunately, the Direction from HM Treasury is completely silent surrounding CJRS and annual leave, and the recent updates leave many questions. It does not address whether employees can take or are required to take annual leave while they are furloughed.

Making a Claim

HMRC intends to publish practical operational guidance on how employers can prepare and upload their claims under the CJRS. The online system for employers to upload their claims will be live starting April 20, 2020, and HMRC will begin making payments on April 30, 2020. Payments will be made into employers’ bank accounts within four to six working days of receiving claims.