Taylor Walton CJRS Update – 5 August 2020
Since our previous guidance of 9 July in relation to the changes to the Coronavirus Job Retention Scheme (CJRS) which began to take effect from 1 August, the Government has issued further clarification on some aspects of the CJRS as follows:
- No extension to CJRS - In response to an interim report by the Treasury Committee entitled “Economic impact of coronavirus: Gaps in support”, the Chancellor has confirmed that there will be no further extension to the CJRS or the Self-Employment Income Support Scheme . Although the Chancellor described these schemes as the right response to the first stage of the pandemic, he confirmed that they have been adapted as far as possible, and the Government will now evolve its approach to support, protect and create jobs in other ways. The schemes will end on 31 October 2020.
- Notice Periods - On 17 July 2020, HM Revenue and Customs updated its guidance on which employees can be furloughed under the CJRS to clarify that claims can be made in respect of the notice periods of furloughed employees. This extends to contractual notice periods which are longer than the relevant statutory minimum notice period. Previously, the position had been unclear as the relevant guidance referred to statutory notice periods only. Consequently, there was some concern that HMRC had intended to make a deliberate distinction between statutory and contractual notice periods and it is now clear that this is not the case.
- Calculating notice and statutory redundancy payments - On 31 July 2020, the Employment Rights Act 1996 (Coronavirus, Calculation of a Week's Pay) Regulations 2020 (SI 2020/814) came into force and will require employers to calculate various statutory payments, including statutory redundancy payments and notice pay, with reference to a furloughed employee's normal pay. In summary, the regulations state if an employer makes a furloughed employee redundant, the employer will need to calculate statutory redundancy pay and statutory notice pay (among other payments) with reference to the employee's normal pay and not with reference to their reduced furlough pay. The Regulations create a special scheme for the calculation of a week's pay for those employees who are or have been furloughed under the CJRS. The scheme will cease to apply when the relevant statutory entitlements are no longer affected by an employee being or having been furloughed.
- Holiday during flexible furlough - It has been clear for some time that employees can take a period of holiday during furlough leave and that the employer can make a claim in respect of that period of holiday under the CJRS (although the employer will be obliged to top up pay to normal levels for periods of holiday). However, some employers have been confused about their obligations where an employee takes holiday during flexible furlough where the employee is working reduced hours. The Employer’s guidance states that where an employee's annual leave covers days that would ordinarily be working days under their flexible furlough agreement, they should be counted as furloughed time rather than working time. However, the guidance advises that employees should not be placed on furlough for a period simply because they are on holiday for that period. Our understanding is that this means that, where annual leave is taken on working days under the existing flexible furlough arrangement, an employer can claim under the CJRS for payment (up to the cap) for those additional days. However, an employer should not change the usual working arrangement in light of this and if they do so, HMRC may be able to recover any payments claimed as an overpayment (see point 5 below).
- Correcting claims - On 28 July 2020, HM Revenue & Customs published two new guidance documents for employers on what to do if they have claimed too much or too little under the CJRS and the penalties they will face if they fail to report overpayments. In relation to overpayments, it confirms that employers must notify HMRC and make repayments, the process they should follow to do so and the relevant deadlines. Where employers have claimed too little, the guide confirms that they can inform HMRC and amend their claim. HMRC also confirms that it may recover the full amount of any overpayment through an income tax charge, with interest and penalties due on late repayments. Where employers fail to notify HMRC of any overpayment, penalties may be imposed of up to 100% of the overpayment where the employer's failure was deliberate and concealed.
- Job Retention Bonus - On 31 July 2020, HM Revenue & Customs published a policy paper providing further details on the Job Retention Bonus (JRB), originally announced by the Chancellor on 8 July 2020. The policy paper confirms that the JRB will be a taxable one-off payment of £1,000 for every employee who an employer previously claimed for, non-fraudulently, under the CJRS and who remains continuously employed until 31 January 2021. All employers are eligible for the JRB scheme and employers will be able to claim for employees who:
a. Were furloughed and had a CJRS claim submitted for them that meets all relevant CJRS eligibility criteria.
b. Have been continuously employed by the employer from the most recent CJRS claim in respect of that employee to 31 January 2021.
c. Have been paid at least £520 a month on average between 1 November 2020 and 31 January 2021 (a total of at least £1,560 over the three months).
d. Have up-to-date Real Time Information (RTI) records for the period up to 31 January 2021.
e. Are not serving a contractual or statutory notice period that started before 1 February 2021.
Employers will be able to claim the JRB from February 2021 through a Government website. The policy paper confirms that more details of the process will be published in guidance about the scheme by the end of September 2020. In the meantime, employers should ensure that their employee records are up-to-date, and that they correctly report their employees' details through RTI.
Members of the Taylor Walton Employment Team are available to assist you with any employment law queries or concerns arising out of the Coronavirus Pandemic. In the first instance please contact: Alec Colson on email@example.com or on 07711 589574.