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Job Retention Scheme - Update 6th April 2020

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This weekend (4th April 2020) the Government issued further guidance and clarity on the Coronavirus Job Retention Scheme, here’s a summary:

Job Retention Scheme

  • Apprentices can be furloughed and can continue to train. However, while undertaking training the Apprenticeship Minimum Wage / NLW / NMW will apply in the same way that it would for an employee when working for you.
  • “Shielding Employees” is now more clearly defined. If an employee is shielding in line with public health guidance, or those who need to stay home with someone who is shielding and they are unable to work from home and you would otherwise have to make them redundant then they can be furloughed.
  • Equally employees who are unable to work as they have caring responsibilities resulting from Covid-19, such as needing to care for children, can also be furloughed.
  • If an individual has multiple employments then each is separate and distinct, and so an individual can be furloughed from one employer but continue to work for another, or alternately, can be furloughed from multiple employers.
  • Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.
  • The Government has also added new guidance re former employees. Previously where an employee worked for you on or before 28 February and you then made them redundant due to lack of work, if you re-hired them you could then furlough.  The new guidance now states: If you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme. What isn’t clear is how this would impact automatic enrolment i.e. do they resume their previous status or are they treated as a new employee?  If the former then a number of exceptions uploads will be required for the pension providers?  Should they be treated as new starters or reinstated leavers?

Eligibility has been extended to individuals who are not necessarily employees in employment law terms but who are paid via PAYE including:

  • Directors/Company Secretaries.
  • Salaried members of LLP’s
  • Agency workers including those employed by an umbrella company.
  • “Limb (b) workers” – dependent contractors commonly referenced as gig workers.

 
Company Directors:

As expected, Directors can be furloughed, but the guidance does state that the decision to furlough a Director should be considered and documented as a formal decision of the company (board minutes) and the Director notified in writing.
While the guidance acknowledges that a Director has statutory duties which are separate from their employment obligations, it does not give a great deal of additional information. It simply states that “they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provide services to or on behalf of their company” which leaves a lot of scope for interpretation, and so I would say Directors should act with extreme caution if undertaking any activity for the business while furloughed.  This will be particularly important for individuals within a PSC.

You can only claim from the date an employee physically stops working.

How much you can claim?

As noted previously you can claim for your Employers National Insurance and Pension Contributions. However, this does not extend to an amount paid because you choose to “top up” an employee and also does not cover pension contributions that are above the mandatory employer contribution.  If you have a pension scheme which varies from the workplace automatic enrolment scheme, then you will need to continue making the appropriate contributions and so this may result in a shortfall in your payment from the government under this scheme.

There is now confirmation that overtime, fees and compulsory commission payments can be included in the claim. So for workers on variable pay where you can claim for the higher of the amount paid in the same payment period last year or the average of the payments in 2019/2020, you can include overtime.  However, any payment which is “discretionary” such as a bonus or non contractual commissions and non cash payments must be excluded. Again this leaves room for interpretation and so isn’t hugely helpful, particularly in respect of commissions.

BIK and Salary Sacrifice Schemes will not form part of the amount you can claim. Importantly HMRC has agreed that COVID-19 is a life event allowing employees to opt out of a salary sacrifice arrangement but you will need to agree this with the employee and amend their employment contract. 

 
For further details on the Job Retention Scheme, including FAQ and a link to a downloadable letter template, please click here.
 


If you have any questions on the above updates or you'd like more information or advice, please get in touch with Karen Thomson at Covid19help@armstrongwatson.co.uk or call us on 0808 144 5575.

Contact Karen