Coronavirus Job Retention Scheme – further guidance on furloughing

Over recent days, HMRC have provided further guidance for employers on how the Coronavirus Job Retention Scheme will operate.  Highlighted below are some of the points from the updated guidance.

The information provided in this article is based on the details available at 6 April 2020.

  • To be eligible for the grant, employers must notify any employee being placed on furlough in writing. A record of this communication must be kept for five years.  (This includes directors of personal service companies placing themselves on furlough).
  • It is possible for employers to place an employee on furlough if they are shielding in line with public health guidance (or need to stay at home with someone who is shielding) and they are unable to work from home, resulting in their employer otherwise having to make them redundant. It has also been announced that employees who are unable to work due to care responsibilities caused by Covid19, for example looking after school-age children, can also be furloughed.
  • If an employee has stopped working for an employer on or after 28 February 2020, it has been confirmed that their employer can re-employ them, place them on furlough and claim for their wages through the scheme even if they left their employment voluntarily. This was not previously understood to be possible, as the original guidance stated this would only be possible where the affected employee had been made redundant. However, it is important to note that employers are not under a legal obligation to re-instate ex-employees in order to place them on furlough.
  • Employers may claim for any regular payments they are obliged to pay their employees. This includes wages, past overtime, fees and compulsory commission payments. However, payments such as discretionary bonuses (including tips) and commission payments should be excluded, as should non-cash payments.
  • It has been made clear that the cost of non-monetary benefits in kind paid to furloughed employees, including salary sacrifice, should be excluded from the claim calculations.
  • Normally, an employee cannot switch freely out of a salary sacrifice scheme except in specific circumstances. HMRC agrees that COVID-19 counts as an event that could warrant changes to salary sacrifice arrangements, so long as the relevant employment contract is updated accordingly.
  • Employees are permitted to work for another employer whilst they have been placed on furlough (if contractually allowed), and this will not affect their entitlement to the Scheme.
  • The guidance states that “employees still have the same rights at work”, for example, accruing their holiday entitlement and period of service, however, we still have no clarification on the treatment of an employee’s annual leave taken during their period of furlough; the government has remained silent on this, although we hope further guidance will be issued before the scheme goes live at the end of this month.
  • The minimum period for which an employee may be furloughed is 3 weeks. Employees can be furloughed multiple times, so it would appear that having a “furlough rota” is permissible as long as each period of furloughed leave is for a period of 3 weeks.

Remember: The government have reconfirmed that, to be eligible for the grant, an employee(s) on furlough must not undertake work for, or on behalf of, their employer.

Other sources of help in relation to furloughing

Our clients who have taken out Tax Compliance Service cover in relation to tax enquiries have access to a dedicated HR Helpline; if you would like any further information about this, please let us know.

We recommend that you read the guidance in full and get in touch with your usual RG contact if you have any further questions.

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