Job Retention Scheme – Yesterdays Update Provides Much Needed Clarity

April 18th 2020

HMRC updated their online guidance relating to this scheme yesterday (Friday 17 April) just in time for the first applications to be made this coming week.

Claim for wage costs through the Job Retention Scheme
Check if you could be covered by Job Retention Scheme

The full guidance can be found at these two separate sites but we have highlighted below the significant changes and clarifications.

1. The Scheme has been extended by one month and now has a provisional termination date of 30 June.

2. Holidays: HMRC have confirmed that an employee can be on ‘holiday’ during the furlough period without the claim period being jeopardised. They reiterate the ACAS guidance that any employee on holiday during furlough should be paid 100% of their earnings, so will require to be ‘topped up’ by the employer.

3. Bank Holidays: If your employee usually works bank holidays then this day can be included in the furlough claim. If your employee usually takes a bank holiday as leave then pay should either be ‘topped up’ to 100%, or the employee can be given a day of holiday in lieu.

4. Statutory Maternity/Paternity/Adoption pay commencing: Your employee should start their leave as normal. If their earnings have reduced due to being put on furlough prior to leave, this may affect the calculation of their statutory pay.

5. Sick Leave:
a. An employer can choose to furlough an employee who is currently on sick leave. The employee will stop receiving Statutory Sick Pay (SSP) and start receiving 80% furlough pay.
b. An employer can claim back SSP through the rebate scheme and also claim through the Job Retention Scheme for the same employee, but not for the same period.
c. An employer can choose to furlough an employee who has been off on long-term sick leave.
d. If a non-furloughed employee becomes ill the employer is likely to qualify for the SSP rebate scheme whilst that employee is off sick.
e. If a furloughed employee becomes ill the employer can decide whether to move them to SSP rates or maintain them at the normal furlough rate. The employer will still be eligible for the costs of 80% pay through the job retention scheme if that is what they choose to continue paying.

6. Necessity of UTRs for application: It has been clarified that a UTR will only be necessary where it is appropriate, meaning that for associations without UTRs claims will still be possible.

7. Fixed Term Contracts: Although fixed term contracts can be renewed or extended without disrupting a furlough claim any contracts which ended without being extended or renewed on or before 19 March 2020 will not be eligible for the scheme.

8. Contractors with public sector engagements who are deemed to be within IR35 may be eligible for the scheme.

9. Overtime: No particular clarity has been offered in this respect. The language of ‘past overtime’ is still being used. The exact language is now ‘[the grant] will be calculated based on your regular, contractual pay, such as wages, compulsory commission and past overtime. The calculation will not include discretionary commission (including tips) payments or bonuses, non-cash payments or benefits in kind.’ On the basis that the language has not been clarified we can assume that past overtime has to be taken into account by way of the ‘variable pay’ calculations.

10. Record Keeping:
a. The guidance clarifies that there needs to be a written record of the employee being furloughed but the employee does not have to provide a written response.
b. It also advises that all records and calculations in respect of your claim, including the amount claimed for each furloughed employee and the period for which each employee is furloughed should be retained for 5 years.