The government has just announced that the Coronavirus Job Retention Scheme (CJRS) will be extended to 30 June 2020, which is a welcome relief given the recent extension to the lockdown.
The Treasury has also issued a Direction to HMRC which provides legally binding guidance for the CJRS. Although amendments can still be made it is unlikely that it will be varied to a high degree. Most of it affirms the guidance previously given however below are the major features of the Direction:
Employees who were on PAYE on 19 March 2020 are now eligible, potentially extending the CJRS to employees hired between 29 February and 19 March.
Employees can be furloughed for any reason, not just because they would have been made redundant otherwise, again extending the reach of the CJRS.
In order to make a claim under the CJRS the employee must consent in writing that they will cease carrying out any work for the employer during their furlough leave. This will be in most of your furlough agreement letters, however a review of these, to ensure this is the case, is recommended.
An employee cannot be paid Statutory Sick Pay or any other statutory payment whilst on furlough leave, but can be on furlough leave once any statutory payments have come to an end.
If an employee on any form of statutory or unpaid leave, such as unpaid sabbatical, on or before 28 February 2020 and then placed on furlough leave will be furloughed for the basis of the CJRS once the period of unpaid leave previously agreed has ended.
Calculation of Pay
The Direction introduces the concept of a “fixed-rate employee”, essentially those who are salaried hour workers. For these employees, the CJRS will not pay out in respect of anything that goes beyond their basic salary at 19 March. For employees whose pay varies, you are not to include irregular salary or wages such as conditional payments, payments based on performance or bonuses in the calculation of their salary.
There are still aspects, such as annual leave, which remain without guidance, however we will continue to update our website with the latest guidance. If you have any questions regarding the CJRS and furlough leave, or if we can assist during this difficult time, please contact a member of our team.