Coronavirus (COVID-19) – claiming employees' wages through the Job Retention Scheme
Breaking news for employers 20 April 2020
Applications for reimbursement under the Job Retention Scheme are open today.
The online service to make a claim opened today (20 April) at 5:30am. We are aware that some organisations have already been able to gain access to the portal, and have reported it as easy to use. We understand that the system crashed for some users (although not all) at around 7:20am. It is likely that HMRC will be trying to restrict the number of users actively making a claim at any one time, in order to keep traffic down and avoid overloading the system entirely.
You can access the service through the Government Gateway.
To assist with applications, the Government has published a guide, entitled "Claim for your Employees' Wages through the Coronavirus Job Retention Scheme (CJRS) – A step-by-step guide for employers". You can find a copy of the guide here. There is also further advice available in some pre-recorded webinars, which can be found on the Government's Youtube channel – the link to these is contained in the guide. Some key points are as follows:
The information that employers will need to have to hand before making a claim is:
The number of employees being furloughed.
The start and end dates of the employees' furloughing period.
The name and National Insurance Number of each furloughed employee.
The employer's PAYE scheme reference number.
The employer's Corporation Tax Unique Taxpayer reference, Self-Assessment Unique Taxpayer reference or Company Registration number.
The employer's UK bank account details.
The employer's registered name.
The employer's address.
The relevant amount being claimed for reimbursement, including contributions for employer NICs and employer pension contributions (up to 3%).
For those employers claiming for more than 100 employees, the claim information will need to be uploaded in one of the following formats: XLS, XLSX, CSV, ODP.
HMRC will be providing a claim calculator, to allow employers to check the amount they are claiming (we do not have more information about this, as yet). There is also some newly published guidance on calculating the 80% of wages, which includes further, welcome clarification on overtime and commission payments (see the section "What to include when calculating wages")
To access the system on gov.uk, employers will need to have a Government Gateway ID and password, and an active PAYE enrolment. If an employer does not have these, they can register for them here and here.
The application needs to be completed in one session – there is currently no save and return option. Sessions will time out after 30 minutes of inactivity.
Employers will receive payment six working days after making an application – keep hold of the claim reference number (by, for example, printing out the confirmation screen) in case contact needs to be made with HMRC if funds are not received (the Government is requesting that HMRC is not contacted unless it has been more than 10 working days since the claim was made).
Employers should retain the calculations that form the basis of their claim in case further information is required by HMRC.
Recap of news issued in our briefing of 17 April 2020 – extension to Job Retention Scheme
On Friday afternoon (17 April), HM Treasury announced that the scheme would be extended for a further month, from 31 May 2020 to the end of June.
This change is more than likely to be in response to pressure from large businesses, many of which had identified a need to make major redundancies at the end of the furlough scheme. Based on the original duration of the scheme, these organisations were due to commence the requisite 45 days' collective redundancy consultation on Friday, in order to comply with the legislation in respect of 100 or more redundancies.
It is also consistent with the extension to the lockdown measures, which was announced on Thursday 16 April. Given that the ability to do business is still extremely restricted, and will be so for at least a further three weeks, the Government is continuing to protect jobs at least until the end of June, as "it is vital for people's livelihoods that the UK economy gets up and running again when it is safe to do so" (Rishi Sunak, Chancellor of the Exchequer).
Annual leave and furlough
On Friday evening (17 April), the Government updated the employees' guidance to the scheme in respect of annual leave and, notably, not the employers' guidance, which would obviously be the first port of call for businesses. As this change might be missed by many of our clients and contacts, we would like to draw it to your attention, here.
The employees' guidance now states:
Whilst an employee is furloughed, they will continue to accrue annual leave as per their employment contract. This is the advice we have been giving to clients since the scheme has been in place, but is welcome clarification.
Employer and employee can agree to vary holiday pay entitlement as part of the furlough agreement; however, almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year, and cannot go below this figure.
This seems to suggest (although admittedly it is not clear) that employers can agree with their employees to vary the amount of holiday entitlement which accrues during furlough. However, it is important to note that 1) employees will have to provide their express consent to this, given that it will be a change to their contractual terms, and 2) as the guidance suggests, employers and employees cannot seek to contract out of the statutory leave entitlement of 5.6 weeks.
Employees can take holiday whilst on furlough. Working Time Regulations (WTR) require holiday pay to be paid at employees' normal rate of pay or, where their rate of pay varies, calculated on the basis of the average pay they received in the previous 52 working weeks. Therefore, if employees take holiday whilst on furlough, they should be paid their usual holiday pay in accordance with the WTR.
Employers will be obliged to pay the additional amounts over the grant, although they will have flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period (the latter is not defined, but is presumably such period after the lockdown has been lifted when business is returning to normal). It is important to note that, even in the absence of this guidance, employers are entitled, by law, to refuse an employee's holiday request due to business need. The ability of employees to take holiday whilst on furlough previously looked doubtful, as it seemed to be at odds with the 'primary purpose' of the employees being away from work, as this was due to the effect of Coronavirus (COVID-19), rather than a 'period of rest', as prescribed in the WTR.
In addition, there was some doubt as to whether a period of holiday would interrupt the necessary 3-week minimum period of furlough in order to be eligible for reimbursement. However, it has now been directed by the Government that holiday can be taken during furlough, although it is important that employers 'top-up' any holiday pay to 100% of employees' normal salary.
They can seek reimbursement for the 80% under the scheme, but will need to fund the remaining 20% themselves. It is still not clear whether employers can direct that employees take holiday during furlough, or whether they can just accept requests which are made by employees. The guidance does not answer this, and it is a subtle, yet important, distinction.
At present, the vast majority of employment lawyers and barristers consider that employers cannot require employees to take annual leave during a period of furlough, as it contradicts the purpose of such leave under the European Working Time Directive. It is likely that we will receive clarification on this, and other elements of the interaction between annual leave and furlough, as the Government has expressly stated that "during this unprecedented time, we are keeping the policy on holiday pay during furlough under review".
'Confirmation in writing' requirement under the Treasury Direction
In last week's Treasury Direction, it was stipulated that, in order for an employee to be furloughed, employer and employee 'must have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment'. This is contrary to all of the iterations of the Government's employer guidance, including the current version, which states "to be eligible for the grant, employers must confirm in writing to their employee confirming that they have been furloughed…there needs to be a written record, but the employee does not have to provide a written response". We explained about this in our update of 16 April.
Throughout the life of the scheme so far, we have been advising our clients and contacts to obtain express written consent as a 'belt and braces' approach, although, until the publication of the Treasury Direction, this was not strictly required. For those employers who have not sought express written consent, we would advise obtaining retrospective consent wherever possible.
Given the understandable confusion that this clarification has caused some employers, who have been dutifully following the Government guidance, it is likely that further commentary on this point will be issued in the forthcoming days. Interestingly, even since the issuing of the Treasury Direction, the Twitter account of HMRC Customer Support has still been responding to queries with the advice "once agreed, the employer must notify the employees in writing that they have agreed to be furloughed, but there is no need for the employee to respond confirming their agreement". Whilst we cannot rely upon a tweet from HMRC's Customer Support function, it could be an indication of forthcoming guidance on this issue.
Creation of the Statutory Sick Pay (General) (Coronavirus Amendment) (No.3) Regulations 2020
The previous version of the regulations, which were last updated on 16 March 2020, presented a wholly unsatisfactory position. Whilst the purpose of the regulations was to expand the eligibility for Statutory Sick Pay ('SSP') so that, in addition to those individuals who were unfit for work, it covered those who were social distancing, the regulations only referenced the social distancing / isolation guidance of 16 March 2020.
This had the (perhaps unintended) effect that, in addition to those individuals who were sick, the only other categories of individuals eligible for SSP were those who were self-isolating either because they were showing symptoms of Coronavirus (COVID-19), or they lived with someone who was. The regulations excluded those who were social distancing or shielding as a result of their vulnerable status.
The new regulations appear at least to partially address that problem, by providing that a person is deemed to be incapable of work if they are unable to work because they fall within the extremely vulnerable category and have been advised to shield. There is no mention of those individuals who are advised to stay at home because they are over 70 or have a less severe pre-existing health condition. The regulations came into force on 16 April 2020 and, at present, it does not appear that they have retrospective effect. Therefore, it seems that shielding employees will only be entitled to SSP from 16 April 2020 onwards.
[CONTENT CORRECT AS AT 20 APRIL 2020]
If you would like to discuss any of the issues raised in this briefing, or have other concerns about the impact of Coronavirus, please contact Rachael Lloyd, James Baker or Andrew Tobey in Michelmores' Employment team.
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This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.