HMRC updates guidance on Coronavirus Job Retention Scheme again

In a flurry of end-of-week activity, not only has the Chancellor announced an extension to the Coronavirus Job Retention Scheme from 31 May 2020 until at least 30 June 2020, HMRC has revised its existing guidance and also published new documents, at the same time confirming that the online employer portal will be open on Monday 20 April 2020.

Given the imminent go-live date it is perhaps unsurprising that  HMRC has sought to do more to assist employers at this late stage; it has indicated that it is aiming to enable as many employers to ‘self-serve’ as possible.  However, there is also no doubt that publishing last minute changes can, in fact, have unintended consequences and actually risk causing employers significant uncertainty over key aspects of eligibility for the scheme at a point when they have already relied on earlier versions of HMRC’s guidance to furlough significant numbers of their workforce.

In summary, today HMRC has:

The key changes to be aware of are as follows:

Employer guidance

  • Duration: The JRS is now in place until at least 30 June 2020, but it may still be extended, if necessary
  • Fixed-term contracts: The guidance now states (new words in italics) that contracts can be renewed or extended before their natural conclusion and that there is no minimum period which must be left to run on a fixed-term contract to enable it to be renewed or extended but it must not have endedWhere a fixed-term contract ends because it is not extended or renewed before its natural conclusion employers will no longer be able to claim grant once the contract ends. Fixed-term contracts which ended without extension or renewal on or before 19 March 2020 will not qualify for the grant once they have ended.  Although, separately, the guidance still permits rehire and furlough of employees who meet the specified on-payroll criteria, this new wording is likely to cause consternation for employers who have agreed to rehire fixed-term employees whose contracts expired on or before 19 March 2020, raising a question mark over eligibility for access to the CJRS.
  • Agreement to furlough: The guidance now supplements its original wording which provided that employers must confirm in writing to their employees that they have been furloughed, with the following: If this is done in a way that is consistent with employment law that consent is valid for the purposes of claiming the CJRS,  There needs to be a written record but the employee does not have to provide a written response. It is by no means clear, however, how this fits with the clear wording of the Treasury Direction of 15 April 2020 which states that a condition of furlough is that the employer and employee must have a written agreement that the employee will cease all work for the employer.
  • Misuse of CJRS: The guidance now contains express reference to HMRC checking any claims made through the scheme and states that payments may be withheld, or need to be repaid in full, if the claim is based on dishonest or inaccurate information, or found to be fraudulent.  HMRC has also put in place an online portal to allow employees and the public to report suspected CJRS fraud.

Guidance on calculating claim

  • Components of pay: The guidance sets out details of the obligatory regular payments which employers should take into account when calculating 80% of an employee’s wages. These include:
    • regular wages paid to employees
    • non-discretionary overtime
    • non-discretionary fees
    • non-discretionary commission payments
    • piece rate payments
  • The guidance states that the following cannot be included:
    • payments made at the discretion of the employer or a client – where the employer or client was under no contractual obligation to pay, including:
      • tips
      • discretionary bonuses
      • discretionary commission payments
    • non-cash payments
    • non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay
  • In some comfort to employers, the guidance states: “Choose the calculation you think best fits the way your employee is paid. For example, if you pay your employee a regular salary, use the calculation for fixed pay amounts. HMRC will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice of approach is made“.
  • Holidays: For the first time (and broadly replicated in the updated employee guidance), HMRC has addressed holiday and holiday pay and confirms that holiday accrues and can be taken during furlough. The guidance confirms that holiday pay must be paid at 100% of usual pay in accordance with the WTR.  The guidance states that: Employers will be obliged to pay the additional 20% over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their pay to 100% of usual pay, or give the employee a day of holiday in lieu. This part of the guidance concludes by saying: During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.
  • Online calculator: An online calculator will be available from 20 April 2020 to assist employers to calculate their claim.
  • Examples: The guidance also includes a number of worked examples to assist employers.