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The Coronavirus Job Retention Scheme (CJRS) successfully launched yesterday (on 20th April 2020) with a reported 140,000 employers accessing the scheme system. At the same time, there are still uncertainties about how the scheme will operate. On 17th and 20th April, the Government published further guidance on the Scheme.
Important points for employers to note include:
The revised HMRC guidance published on 20th April states that employers must confirm in writing to their employee that they have been furloughed. The HMRC guidance also provides that employers need to ensure that there is a written record of this communication (which must be kept for five years) but do not need to be provided with a written response from the employee confirming their acceptance in order to be eligible under the scheme.
However, this directly conflicts with the content of the Treasury Direction to HMRC published on 15th April, which stated that an employee can be furloughed only when the employer and employee have ‘confirmed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment’. It is important to note that the Treasury Direction was issued under powers conferred under the Coronavirus Act 2020 and provides the legal foundation for the scheme, and in the event of any conflict is likely to trump other guidance published.
Best practice for employers will be to ensure that they have maintained open communication with their workers and sought their agreement to cease work and being placed on furlough before taking any steps to do so. Once this consent has been obtained, employers must ensure that they confirm this agreement in writing and maintain a copy for five years.
Revised HMRC guidance for employees published on 17th April provides the first information regarding annual leave whilst on furlough. The guidance confirms that furloughed workers continue to accrue annual leave in accordance with the terms of their employment contracts and that when leave is taken it must be paid at their normal rate of pay pursuant to the Working Time Regulations 1998.
Therefore, employers must ensure that they pay their workers their usual holiday pay even if this means topping up the additional amount above the reimbursed sum claimed under the CJRS i.e. topping up the additional 20%. Should a worker normally work bank holidays, then an employer can agree that this is included within the payment of the grant, or should a worker normally take a bank holiday as annual leave then the employer would need to give the worker a day of holiday in lieu or top up the worker’s pay to their usual holiday pay.
Due to the unprecedented nature of the Coronavirus pandemic, the guidance on how to adapt to its impact evolves daily and becomes out of date very quickly. We recommend that you keep checking to ensure you are following the most up to date guidance, particularly as there are still some unanswered questions about the CJRS. Further, in addition to the public guidance, there are always specific circumstances that individual employers must consider, such as a particular employee or employer arrangements or issues (contractual or otherwise). If in doubt, please take advice.