17th April 2020.
Updated guidance on the Coronavirus Job Retention Scheme
On Saturday 4 April 2020, the Government released much awaited updates and further guidance on the Coronavirus Job Retention Scheme (CJRS). Claims under the scheme are likely to be substantial given the closure of many ‘no-essential’ businesses and the inability for employees to continue working during the Coronavirus outbreak.
You will already have received a summary of the scheme details from us shortly after the support package was first announced on 20 March, but this update from the Government provides answers to a number of the questions that our clients have been asking but which we, as professionals, have been unable to answer without this further guidance. More complex situations still require clarity, but we expect further details to be provided as HMRC navigates the new system.
Read our summary of the revised guidance, updates and revisions in our Covid-19 blog channel, with a brief overview of some of the key points, below. We have also updated our CJRS FAQs page which includes previously announced information and the latest updates.
Eligible employers and claims
- The scheme is open to all businesses, charitable and not-for-profit organisations, recruitment agencies and public authorities.
- Individuals employing others, such as a cleaner or nanny, are also included within the scheme provided they meet the eligible claims criteria.
- Employees may be furloughed in three-week blocks (the minimum period permissible), re-employed and furloughed again multiple times in a minimum of three week blocks.
- Any type of employment contract will be included in eligible claims; good news for those on zero-hour contracts and agency workers (including those employed by umbrella companies) who may otherwise be concerned about the prospect of redundancy.
- Fixed term contract employees can also be protected by extending their contracts during the furlough period.
- Dependant contractors (ie. those that provide a service as part of someone else’s business), also known as ‘limb workers’, are eligible for the scheme if paid through PAYE.
The position for company directors
- Company directors salaried through PAYE are eligible, but must not carry out any duties other than those reasonably judged necessary for the purposes of fulfilling their statutory duties in accordance with the Companies Act 2006. A formal decision should be made by the board and communicated to the director in writing and noted in the company’s statutory records. This applies equally to directors operating through their own personal service company.
- Salaried members of Limited Liability Partnerships (LLP) who are on the firm’s payroll and are taxed as employees are also eligible. The terms of the LLP agreement may need to be varied to reflect the fact that the member will not perform any work on behalf of the LLP for the period of furlough.
Clarity on furloughed employees
- Those with more than one job can be furloughed in one job and continue to work in another job, provided those jobs are not with the same employer.
- Furloughed employees can do voluntary work, even arranged by the employer, as long as it is in line with public health guidance and ensuring they do not provide services to, or generate revenue for, or on behalf of, the employer.
- Any employees who were made redundant after 28 February 2020 can be re-employed and subsequently furloughed, with the employer claiming for their wages in the same manner as for existing employees.
- Vulnerable employees who are shielding in line with public guidance, or who are required to stay home with a vulnerable member of their household, can be furloughed.
- People who cannot work as a result of caring responsibilities, including those that need to look after children, as a result of COVID-19, can be furloughed.
- Apprentices can be furloughed but must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training.
There was also clarification on the method for calculating the claims, including guidance around claims for employees on variable pay and for those claiming compulsory commission. Confirmation was also provided of the need for employers to pay any additional employer national insurance contributions and pension contributions should they choose to ‘top-up’ to 100% of the furloughed employees’ salaries.
We have provided a full summary of the latest clarifications in our Covid-19 blog and also provide an updated CJRS FAQs page, featuring answers to some of the key questions.
It is very important that you take legal advice, to ensure the appropriate changes are made to employment contracts, if you are considering furloughing staff, and also to take tax advice to fully understand your obligations and the implications of furlough.
We will be continuing to provide our summaries of the Government announcements as they relate to you and your business. If you have any queries or concerns in relation to applying for the CJRS, or just generally in relation to your way forward through this coming period, please speak to your usual UHY contact by calling 01244 320532, or email [email protected].