Updated Job Retention Scheme Guidance - 10 April 2020
Just in time for the Easter weekend, HMRC has issued a further update to its employer guidance on the Job Retention Scheme. This includes the following 10 key clarifications:
- The scheme will only cover employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution of three per cent) on subsidised furlough pay i.e. so not in respect of contributions above that level.
- Foreign nationals can be furloughed. Grants under the scheme are not counted as “access to public funds” for the purpose of any visa conditions, and employers can furlough employees on all categories of visa.
- When on furlough, an employee cannot undertake work for, or on behalf of, the organisation or any linked or associated organisation i.e. such as a group company. A furloughed employee can take part in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation or a linked or associated organisation. Employers can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.
- Employers are eligible to claim under the scheme for employees of a previous business who transferred after 28 February 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.
- Where a group of companies has multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 28 February 2020, the new scheme can furlough those employees and claim under the scheme.
- If an employee is on sick leave or self-isolating as a result of Coronavirus, they’ll be able to get statutory sick pay, subject to eligibility. The scheme is not intended for short-term absences from work due to sickness and short-term illness or self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they can do so - the employee should then no longer receive sick pay and would be classified as a furloughed employee.
- Employers can, if they wish, furlough employees who are being shielded or off on long-term sick leave. They can claim back from both the scheme and the SSP rebate scheme for the same employee but not for the same period of time. When an employee is on furlough, employers can only reclaim expenditure through the scheme, and not the SSP rebate scheme.
- Furloughed employees retain their statutory rights, including their right to SSP. This means that furloughed employees who become ill must be paid at least SSP. It is up to employers to decide whether to move these employees onto SSP or to keep them on furlough, at their furloughed rate. Employers with enhanced company sick pay provisions should think carefully about this clarification and may wish to consider seeking agreement to disapply these during furlough, particularly if they are not topping up furlough pay so that it is equal to or more than any company sick pay entitlement.
- If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to two weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.
- To claim, employers must provide the following information - employer PAYE reference number; number of employees being furloughed; names, national insurance numbers and payroll/works number of the furloughed employees; employer’s self assessment unique taxpayer reference or corporation tax unique taxpayer reference or company registration number; the claim period (start and end date); amount claimed (per the minimum length of furloughing of three consecutive weeks); bank account number and sort code; employer contact name and phone number.
Notably the Guidance contains no further clarification on the position in relation to taking and pay for annual leave during furlough. The latest ACAS guidance advises that annual leave can be taken during furlough. And HMRC has confirmed, via Twitter but not in the guidance, that this will not break furlough for the purposes of the Scheme. But questions remain as to the level of holiday pay that should be applied, and, indeed, whether a direction to staff to take holidays during a lockdown period, when their activities are severely restricted, is compliant with the European legislation requiring annual leave to provide true rest and relaxation away from work. Employers who seek to run down all annual leave entitlement whilst staff are furloughed also risk adverse publicity.
For tailored advice on the application of the Scheme in the context of your own workforce contact Morag Moffett or the usual member of the employment law team at Burness Paull.
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