Are workers eligible for the Coronavirus Job Retention Scheme?

Are workers eligible for the Coronavirus Job Retention Scheme?

Produced in partnership with Clare Taylor of BDBF LLP

The rules of the Coronavirus Job Retention Scheme (CJRS) are set out in a Treasury Direction which is supplemented by a series of guidance documents issued by HMRC.

In order to be eligible to furlough employees under the CJRS, employers must have:

• created and started a pay as you earn (PAYE) payroll scheme on or before 19 March 2020

• enrolled for PAYE online, and

• a UK bank account

In order to be furloughed, an ‘employee’ must meet the following criteria:

• they must have been on the employer’s PAYE payroll on or before 19 March 2020, and

• a real time information submission notifying payment in respect of them must have been made to HMRC on or before 19 March 2020

The Treasury Direction states that the terms ‘employment’, ‘employed’, ‘employer’ and ‘employee’, for the purposes of the CJRS, have the meaning as set out in section 4 of the Income Tax (Earnings and Pensions) Act 2003 (ITEPA 2003).

ITEPA 2003, s 4 states:

…‘(1) In the employment income Parts “employment” includes in particular—

(a) any employment under a contract of service,

(b) any employment under a contract of apprenticeship, and

(c) any employment in the service of the Crown.

(2) In those Parts “employed”, “employee” and “employer” have corresponding meanings.”’

Workers are therefore included, provided that they meet this definition, and the above eligibility criteria specific to the CJRS.

Further, HMRC guidance specifically states that, provided they meet the eligibility criteria, limb (b) workers are eligible to be furloughed.

A limb (b) worker, so called because the definition is found in section 230(2)(b) of the Employment Rights Act 1996, is someone who works under a contract ‘whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual’.

For further information on limb (b) worker status, see Practice Note: Coronavirus Job Retention Scheme.

It would appear that the specific mention of agency workers in HMRC’s guidance is to provide clarity that it is the agency, and not the end user, who needs to make the decision as to whether agency workers should be furloughed. However, in reality, this decision will need to be made in conjunction with the end user, given that, once furloughed, the individual will not be able to perform any work, via the agency, for the end user.

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