The UK government published updated guidance on the Coronavirus Job Retention Scheme (JRS) on 4 April 2020.
Much of the guidance confirms matters addressed in recent guidance issued by Her Majesty's Revenue and Customs regarding the JRS, contained in McGuireWoods’ earlier alert.
For example, the guidance repeats that employees terminated on or after 28 February 2020 may be rehired and furloughed, that furloughed employees must have been on the employer’s PAYE payroll scheme on or before 28 February 2020 and employers must have a UK bank account. Employees who are shielding others can be furloughed, as can those caring for others affected by the coronavirus. However, employees on maternity leave or sick leave cannot be furloughed until they are due to, or fit to, return to work.
However, some aspects of the guidance have been clarified or appear new.
The guidance now provides that employers must be enrolled for PAYE online, which can take up to 10 days.
The new guidance clarifies that employees may be rehired and furloughed, whatever the reason for their previous termination on or after 28 February 2020 (i.e., including resignation), and that employees may be furloughed several times, thereby allowing employers to rotate furloughed employees, providing the furlough period lasts a minimum of three weeks.
Although the precise circumstances in which an employer may use the JRS are still not entirely clear, it does appear that it is intended to apply where the decision to furlough is caused by the coronavirus crisis, and where, as an employer, “…you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19)….” This suggests that the JRS is not intended to apply where decisions are taken about the workforce for reasons unrelated to the effects of the coronavirus crisis on the business.
The guidance clarifies that apprentices may be furloughed, as can individuals employed by individuals (such as nannies), provided they have been paid through PAYE since at least 28 February 2020. The guidance clarifies that administrators can access the JRS but that the government would expect them to do so only where they believe there is a reasonable likelihood of rehiring the employees in the future.
It is now clear from the new guidance that employees may be furloughed from employment and continue to work in other employment, and continue receiving their full pay for that other employment, without it affecting their or their employer’s rights to claim under the JRS. This seems to apply to employees who already have a second job or indeed those who, having been furloughed, subsequently secure other employment.
Office holders (e.g., directors), salaried members of LLPs, agency workers (including those employed through umbrella companies) and workers are all eligible under the JRS, provided that they were paid through PAYE. Workers who pay tax on their trading profits may be able to claim through the government’s Self-Employed Income Protection Scheme. (For details, see McGuireWoods’ previous alert.)
It has now been clarified that, in addition to “salary,” an employer’s claim under the JRS can include “…any regular payments you are obliged to pay your employees….” Importantly, the guidance explains that this includes wages, past overtime, fees and compulsory commission payments.
Claims under the JRS may not include discretionary bonus or commission payments, non-cash payments, benefits in kind or benefits provided through a salary sacrifice scheme (such as pension contributions).
Employers can reclaim the minimum mandatory employer pension contribution through the JRS in addition to the 80 percent salary, capped at £2,500. From 6 April 2020, the minimum employer contribution under auto-enrolment is 3 percent of the employee’s salary over £520 per month. Any employer contribution above 3 percent cannot be reclaimed through the JRS. Employers still need to continue contributing any balance, unless employees consent to reduced pension contributions.