Treasury Direction to HMRC Coronavirus Job Retention Scheme

We now have what is likely to be the (almost) final version of the Government’s Coronavirus Job Retention Scheme, following a Direction issued by the Treasury to HMRC, following the powers conferred to them by the Coronavirus Act 2020.

The Direction contains authority and instructions for making payments under the CJRS.

Some major points have been raised by the Direction, which are as follows:-

• The previous cut-off date for employees to be eligible (28 February 2020) has now been extended to 19 March 2020 – the day before the Chancellor’s first announcement on the CJRS, provided the employer had submitted real time information payroll data by that date;
• Previously, one of the sticking points between shielding, caring and self-isolating was the requirement that eligibility for some was dependent on those employees who would “otherwise be made redundant”.  That has been lifted, so it is applies to any who are furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease” (para 6.1(c)).
• A director who is furloughed can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of company’s accounts or provision of other information relating to the administration of the director’s company (para 6.6).  Previously we were aware of some directors carrying out other administrative tasks to essentially keep the business ticking over.  This very narrow interpretation of directors’ duties would suggest that such basic housekeeping is not allowed.
• To claim furlough, the employer and employee must have agreed in writing that the employee will cease all work (para 6.7).  That means for all those employers that simply notified their employees that they had been selected for furlough leave might not now be eligible to claim.  The Treasury have confirmed in their Direction that there needs to be written agreement.  Any employer who has not previously confirmed their agreement in writing must now be approached to confirm their acceptance of the temporary change in status.
• The amount of salary for the employee must disregard anything which is not “regular salary or wages”.  That includes disregarding any performance related bonus or discretionary payments and any non-financial benefits (paras 7.3 – 7.5).
• The employer cannot claim for any salary which is “conditional on any matter” (para 7.4(b)).  This might include any agreement you have reached with your employees that payment of their salary depends upon you receiving the payment under the CJRS.  Check the terms of your Furlough Agreements now.
• Unfortunately, the Direction is completely silent on the question of annual leave during furlough leave, beyond the previous direction that you can now carry forward unused holiday to the next holiday year.  We have seen our clients take a number of different approaches to avoid the bottleneck of holidays, just when we are coming out from lockdown and need all our employees back at work.

Any further clarification from HMRC will be included in our series of articles.

If you have any questions about the CJRS or want our employment team to review your current furlough agreements to make sure that they are not going to cause any eligibility problems, then please contact either Stuart Robertson (srobertson@gilsongray.co.uk) or Graham Millar (gmillar@gilsongray.co.uk).

The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.