Coronavirus Job Retention Scheme: fourth and fifth updates to HMRC employer and employee guidance

Key additions and updates to the guidance

Two track changes documents in PDF format, illustrating the additions, moves and deletions that have occurred in the HMRC guidance for:

• employers between the 15 April and 20 April versions, and

• employees between the 15 April and 17 April versions

can be accessed here:

HMRC employer guidance on the CJRS: track changes comparison between 15 and 20 April versions

HMRC employee guidance on the CJRS: track changes comparison between 15 and 17 April versions

Key additions and updates to the guidance made in the 17 April revisions include:

• certain clarifications regarding the requirements of the scheme in relation to agreeing to furlough employees. This now states:

  • ‘To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.’

  • this change has apparently been made to address major concerns that arose when the Treasury Direction was published. This provides that an employee is ‘furloughed’ if, among other things, the ‘employee has been instructed by the employer to cease all work in relation to their employment’. It goes on to qualify this as follows: ‘An employee has been instructed by the employer to cease all work in relation to their employment only if the employer and employee have agreed in writing’ [our emphasis] ‘(which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment.’

  • major concerns had been expressed in relation to employers who, facing severe and urgent financial pressure as a result of the coronavirus outbreak, had placed employees on furlough without seeking their employees’ agreement or, in some cases, even requiring their employees to acknowledge the relevant communication

  • we understand from a communication from HMRC that their position remains that all employers must agree furloughing with the employees that are affected. Once agreed, the employer must notify the employees in writing that they have agreed to be furloughed, but there is no need for the employee to respond confirming their agreement. The Treasury Direction gives effect to this requirement, and HMRC state the Direction ‘should be interpreted in accordance with the position set out in our published guidance’

• a separate new guide for employers: Work out 80% of your employees' wages to claim through the Coronavirus Job Retention Scheme (see: Employer guidance on working out 80% of wages, below); this replicates and substantially expands on information that was formerly set out in the employer guidance

• a new Coronavirus Job step by step guide for employers covering, in brief, mainly bullet-point format:

  • essential information

  • before you make your claim

  • calculating your claim

  • making a claim

  • what to do next

• for the first time in the HMRC guidance, details on holiday and holiday pay for furloughed employees (see: Holiday and holiday pay guidance, below)

• clarification that:

  • employees made redundant, or who stopped working for their employer after 28 February, can be re-employed and put on furlough, but

  • any furlough claim in respect of such employees can only be from the date on which the employer furloughed them, not the date they left employment

• clarification in relation to furloughing employees on a fixed-term contract:

  • their contracts can be renewed or extended before their natural conclusion [our emphasis] during the furlough period without breaking the terms of the scheme (no further indication is given as to the meaning of ‘before their natural conclusion’)

  • there is no minimum period which must be left to run on a fixed term contract to enable it to be renewed or extended, but it must not have ended

  • the furlough period must be for a minimum period of three consecutive weeks

  • where a fixed-term employee’s contract ends because it is not extended or renewed before its natural conclusion, an employer will no longer be able claim grant for them once the contract ends

  • fixed-term contracts which ended, without extension or renewal, on or before 19 March 2020 will not qualify for the grant once they have ended

• further record-keeping recommendations: employers should retain all records and calculations in respect of their claims, including:

  • records of the amount claimed for each furloughed employee, and

  • the period for which each employee is furloughed and a claim made under the scheme

Employer guidance on working out 80% of wages

Key additions to the guidance also include a separate guide for employers entitled Work out 80% of your employees' wages to claim through the Coronavirus Job Retention Scheme. This guidance:

• refers to the online calculator, which is now available to assist employers and their agents in calculating how much they can claim. The calculator cannot currently be used in relation to any employee who:

  • received any top-up pay in the claim period

  • returned from statutory leave, such as maternity leave, in the last three months

  • gets director’s payments

  • has been transferred under the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE 2006) SI 2006/246

  • has been employed ‘at separate times throughout the year’

  • receives employer pension contributions outside of an auto-enrolment pension scheme

• where employers cannot use the calculator, they will need to work out what they can claim manually using the calculation guidance or by seeking professional advice; the guidance emphasises that it is an employer’s responsibility to check that the amount they are claiming for is correct

• sets out in detail how employers can work out the maximum wage amount they can claim

• includes worked examples, eg:

  • where the CJRS grant is claimed for only part of the employer’s normal pay period

  • for full- or part-time employees on a regular salary (referred to in the guidance as ‘fixed rate’ employees)

  • for employees who have not been paid for a full pay period up to 19 March (ie recent joiners)

  • for employees whose pay varies and were employed from 6 April 2019

  • for employees whose pay varies and who started employment after 6 April 2019

• how to work out how much can be claimed for National Insurance contributions

• how to calculate what can be claimed for employer’s pension contributions

• guidance in relation to holiday and holiday pay (see: Holiday and holiday pay guidance, below)

• the practicalities of making a claim, eg:

  • employers cannot make more than one claim during a claim period—they should make their claim shortly before or during running payroll

  • employers must claim for all employees in each period at one time—they cannot make changes to their claim

  • employers can make their claim in anticipation of an imminent payroll run, at the point they run their payroll or after they have run their payroll

  • claims can be backdated to 1 March 2020 where employees have already been furloughed from that date. A claim cannot start any earlier than the date the employee was first furloughed

  • employers must pay the full amount they are claiming to the employee, even if the company is in administration. If the employer is not able to do that, it will need to repay the money back to HMRC

  • the same applies in relation to employer NICs and pension contributions the employer claims regarding an employee. The full amount the employer claims in respect of these must be paid or the employer will need to repay the money back to HMRC

Holiday and holiday pay guidance

A notable omission from all earlier versions of the HMRC guidance has been any information regarding the interaction between furlough and holiday entitlement and holiday pay. To date, the only guidance available has been the Using holiday section of the Acas Coronavirus (COVID-19): advice for employers and employees, which has itself been revised numerous times since it was first published.

Now, both the employer guidance on working out 80% of employees' wages and the employee guidance include a section on holiday pay. This provides:

• furloughed employees continue to accrue leave as per their employment contract

• the employer and employee can agree to vary holiday entitlement as part of the furlough agreement; however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below

• employees can take holiday whilst on furlough

• the Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations (see Practice Note: Holiday pay)

• employers will be obliged to pay additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period

• if an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu

• during this unprecedented time, HMRC are keeping the policy on holiday pay during furlough under review (which perhaps means that further revisions to this guidance are anticipated)

For further information on the evolution of this guidance through the Acas Coronavirus (COVID-19): advice for employers and employees, see News Analyses:

• Acas guidance on coronavirus (COVID-19): holiday section revised

• Acas guidance on coronavirus (COVID-19): more changes to holiday section, and

• Acas guidance on coronavirus (COVID-19): third revision to holiday section

Further resources

We are in the process of updating Practice Note: Coronavirus job retention scheme to reflect the detail of the new and updated HMRC guidance. The revised version will be published shortly.

See also Practice Notes:

• Coronavirus job retention scheme—FAQs

• Coronavirus (COVID-19)—the pensions implications for employers, and

• Coronavirus (COVID-19)—dealing with issues in the workplace