Coronavirus Business Impact: UK Coronavirus Job Retention Scheme – Yet More Detail Confirmed

This OnPoint reports on the further detail issued about the operation of the Coronavirus Job Retention Scheme on Thursday 9 April 2020.

Introduction

On the evening of Thursday 9 April 2020, the UK Government confirmed – by way of an updated version of its guidance to employers and employees – further detail about the operation of its Coronavirus Job Retention Scheme (“the Scheme”) initially announced on on 20 March 2020 and about which further detail was announced on 26 March 2020 and 4 April 2020.

The portal through which claims for payment under the Scheme will need to be made is currently scheduled to open on 20 April 2020 and it is anticipated that the first payments will be made to employers by 30 April 2020. Whilst not addressing the issues of holiday entitlement and pay during furlough, the main additional points of clarification and detail confirmed in the further updated guidance are as follows.

Immigration status

The updated guidance confirms that employers can furlough employees on all categories of visa.

No work obligation

A condition of reimbursement of wage and associated costs under the Scheme is that a furloughed employer must not do any work for the employer. The updated guidance clarifies that this extends to work for any “linked or associated organisation.”

Furlough and sick leave

The updated guidance makes clear that:

• the Scheme, with its three week minimum furlough period, is not intended for short-term absences from work due to sickness – in respect of which Statutory Sick Pay will be payable where applicable. 
• whilst employers can – for business reasons – furlough employees who are off sick (and who would then cease to receive sick pay), short term illness or self-isolation should not be a consideration in deciding whether to furlough an employee. 
  
• employees who are being “shielded” or are absent from work on long-term sick leave can be furloughed. The guidance no longer states that those who are shielding can (only) be furloughed if the employee would otherwise have been made redundant.
• as furloughed employees retain their statutory rights, they must be paid at least the applicable rate of Statutory Sick Pay if they become sick but that it is for the employer to decide whether to move such employees to Statutory Sick Pay or to continue with the current furlough arrangements including the furlough rate of pay. 
• consistent with this, employers can claim payments under the Scheme and under the SSP rebate scheme in respect of the same employee but the not for the same period of time.

Business transfers

Where, after 28 February 2020, employees transfer to a new employer by way of a TUPE transfer or where the PAYE business succession rules apply, the new employer is eligible to claim under the Scheme in respect of furloughed employees.

Payroll consolidation

Where, after 28 February 2020, employees are transferred into a new consolidated PAYE Scheme from multiple PAYE schemes within a group of companies, grants can be still be claimed under the Scheme in respect of furloughed employees.

Return from family leave

The updated guidance confirms that the amounts to be claimed by employers under the Scheme in respect of those returning from the various forms of statutory family leave after 28 February should not be calculated by reference to the pay they received whilst on statutory leave but by reference to their salary before their leave or their variable pay assessed in accordance with the guidance.

Miscellaneous

It is clarified that the Scheme will cover the employer’s National Insurance contributions and the employer’s minimum auto enrolment pension contributions payable in respect of an employee’s "furlough pay" and not the employee’s usual pay.

No part of the grant to be made under the Scheme should be “netted off” to pay for the provision of benefits or a salary sacrifice scheme.

The details which employers will need to provide as part of their application for payment under the Scheme has been updated to include the names, National Insurance numbers and payroll/works numbers for the furloughed employees and the employer’s Self-Assessment Unique Taxpayer Reference, Corporation Tax Unique Taxpayer Reference or Company Registration Number.

An agent authorised to act for an employer for PAYE purposes will be able to make a claim for the employer but a file only agent will not be.

New detail is provided on the operation of the Scheme in relation to contractors with public sector engagements falling within the scope of the IR35 off-payroll working rules.

Holiday

The Government’s guidance on the Scheme has not addressed expressly the position of employees’ holiday entitlements and associated holiday pay during periods of furlough.

That said, in response to queries raised via Twitter, HMRC Customer Support has expressed the views that:

• if an employee is on holiday or has a scheduled bank holiday while on furlough they are still entitled to receive this holiday.
• employers must ensure that any employee on holiday or a bank holiday is paid their full salary for that period of holiday.

Likewise, Acas has indicated in its updated Coronavirus guidance on holiday issues that employees can request and take their holiday in the usual way, that this includes Bank Holidays and that furloughed workers must get their usual pay in full for any holiday that they take. HM Treasury confirmed in a tweet on 9 April 2020 that guidance on the holiday issue in relation to the Scheme will be issued next week and employers should keep their approach to holiday and holiday pay for those employees who are furloughed under review.