Employment Law Cases

Coronavirus Job Retention Scheme

From 1 July 2020 the Coronavirus Job Retention Scheme (CJRS) will change and claims under the old scheme must be made by 31 July 2020. The scheme will be closed to new entrants on 30 June 2020 and only those employees (widely defined) previously furloughed for a minimum of three weeks prior to 30 June 2020 can use the new scheme.

This means that the last date on which a previously unfurloughed employee can be furloughed is 10 June 2020. The original scheme was announced on 26 March 2020 and HMRC issued guidance which has been updated on numerous occasions since then to answer questions, iron out inconsistencies, plug loopholes and clarify points. Much of this guidance will continue to apply but there will also be some major changes as announced by the Chancellor on 29 May including flexibility to bring employees back part time from 1 July and a reduction in the monies an employer can claim for from 1 August 2020 together with an obligation to top up the employee's salary to 80% capped at £2,500. Further guidance from HMRC and directions from the Treasury in respect of the new scheme from 1 July will apparently be available from 12 June. 

Official sources of guidance on CJRS

It is important to remember that the HMRC guidance is just that - guidance. However, the directions issued by the Treasury appear to have some form of statutory authority although the nature of this is unclear. There continue to be some discrepancies but a written response to a question in the House of Lords indicates that in those circumstances HMRC will apply its guidance. HMRC has also confirmed that the scheme does not, in its opinion, amount to state aid.

Q: What are the basics of the CJRS?

A: The HMRC requirements are:

  • An organisation must have created and started a PAYE scheme as at 19 March 2020, be enrolled for Payroll On Line and have a UK bank account.
  • An employer must agree with the employee (widely defined) that they are a ‘furloughed worker’.
  • Employees must be notified in writing that they have been furloughed.
  • Employees must be furloughed on each occasion for a minimum of three weeks
  • Until 1 July 2020 the employee cannot do any work for the employer that has furloughed them but can volunteer or work for someone else if contractually allowed.
  • The employee can do training when furloughed provided they receive minimum wage when doing so.
  • Up until 31 July 2020 an employer can claim 80% of wages up to a maximum of £2,500 per month per furloughed employee plus employer’s NICs and 3% pension contributions. There are changes after that date - highlighted below.
  • An employer can only claim for furloughed employees that were on their PAYE payroll on or before 19 March 2020 and where an RTI submission notifying payment in respect of that employee to HMRC had been made on or before 19 March 2020.
  • From 1 July 2020 employers can only claim for employees who have previously been furloughed for a minimum of three consecutive weeks.This means that the last date on which a previously unfurloughed employee can be furloughed is 10 June 2020.
  • The employer must have a UK bank account.

Q: What can an employer claim?

A:  Up until 31 July 2020 an employer can apply for a grant of 80% of an employee’s wages (see below) capped at £2,500 all of which must be paid to the employee, together with employer NICs on that sum and 3% pension contributions which the employer can keep. From 1 August 2020 the employer will no longer be able to reclaim employer's NICs or 3% pension but can still claim 80% of wages capped at £2,500. From 1 September the employer can only reclaim 70% of wages capped at £2,187.50 and must pay to the employee 10% of wages to make it up to 80% up to a cap of £2,500. From 1 October the employer can reclaim 60% of wages capped at £1,875 and the employer must pay 20% of wages to make it up to 80% up to a cap of £2,500. The scheme closes on 31 October 2020.

Q: How long will the CJRS last?

A: The scheme closes on 31 October 2020 but claims for the period to 30 June 2020 must be made by 31 July 2020. No new entrants to the scheme will be accepted after 30 June 2020 and after that date only those who have previously been furloughed for at least three weeks will be eligible - this means that in practice employers have until 10 June 2020 to furlough employees. Revised HMRC guidance and Treasury Directions are expected by 12 June 2020. 

Q: Who can an employer claim for?

A: Employees (which is widely defined, see below) who were:

  • hired before 19 March 2020 and
  • which were notified to HMRC on an RTI (Real Time Information) submission on or before 19 March 2020 and
  • where an RTI submission notifying payment of that employee to HMRC was made on or before 19 March 2020 and
  • are furloughed for at least three weeks

After 1 July 2020 an employer can only claim for those employees who have previously been furloughed for a minimum of 3 weeks prior to 30 June 2020 and in any claim period employers are limited in terms of numbers of employees they can claim for to the maximum number of employees they claimed for under any previous claim under the current CJRS.

Those who stopped working for an employer after 28 February 2020 for whatever reason can be re-employed and furloughed, even if they are not re-employed until after 19 March 2020. 

Q: Which employers qualify for the CJRS?

A: The guidance makes it clear that the CJRS is open to all employers and it recognises that businesses will be affected in different ways. The purpose of the scheme is now said to be to save jobs and the economy.

The CJRS is open to businesses, charities, recruitment agencies where their agency workers are paid through PAYE and public authorities. However, for public and non-public authorities which receive public funding for staff costs already then it is expected that this public funding will be used to continue to pay employees and that they will not be furloughed.

Those receiving public funding specifically to provide services to deal with the outbreak are not expected to furlough staff but it is recognised that some organisations who are not primarily funded by the government and where staff cannot be redeployed, may have to furlough staff.

An employer must return any grant to HMRC if they are unwilling or unable to use the grant for the purpose of the CJRS and the new guidance cautions against fraud.

Q: Who can be furloughed?

A: Full-time and part-time employees on any type of contract, including fixed-term contracts, employees on agency contracts (who are not working, including those paid through umbrella companies) and employees on flexible or zero-hours contracts, office holders (including company directors even if they are paid annually), salaried partners in an LLP and ‘limb B’ workers which are those who work under personal contracts but who are not in business on their own account - provided that all of these were hired before 19 March 2020 and are paid through PAYE. It does not apply to the self-employed.

Personal service companies can claim and contractors with public sector engagements in scope for IR35. Where these people cannot be redeployed then the public sector organisation must advise both the PSC and the fee payer and the individual can be furloughed and the claim made by the fee payer. However, if the contractor is still receiving money from a public sector client this should be excluded for the purpose of reference pay for the CJRS if they decide to furlough themselves as an employee or director.

Company directors can only undertake work that they are obligated to do by an Act of Parliament in relation to the filing of their accounts or the provision of information in relation to the administration of the company, they can pay their employees and make a claim under the CJRS.

It is possible to still be a pension trustee and be furloughed providing they are not an independent trustee or an organisation whose business is supplying pension trustees.

Q: What date do we claim from?

A: From the date the employee was sent home and NOT the date the decision was made or the date they were written to.

Q: How do we apply for the CJRS?

A: The online portal opened on Monday 20 April. Employers will have to self-certify that they have furloughed employees. See the guidance on how to calculate the 80%. Claims for the current scheme must be made by 31 July 2020. Claims under the new scheme will be open from 1 July 2020 and as before, employers can make a claim in anticipation of an imminent payroll and can make claims for a minimum period of a week. From 1 July 2020 employers cannot make claims that overlap months.

Q: What is covered under ‘wages’ and does this include overtime or commission?

A: For employees whose pay does not vary, this is their ‘regular’ salary before tax including non discretionary fees, commission payments and overtime in their last pay period before 19 March 2020 but excluding discretionary bonuses (including tips), commission and non-cash payments. If employers have already calculated payments based on previous guidance up to 28 February 202 then this figure should be used.

The 14 May guidance confirmed that 'non-discretionary overtime' is overtime where the employer is contractually obliged to pay overtime at a set and defined rate in the event that overtime is worked and the Treasury Direction of 22 May emphasises that it must be contained in a legal enforceable agreement setting out how it is calculated. 

For those whose pay varies it is the earnings in the same pay period in the previous year; or the average earnings in the 2019-20 tax year (or fewer if they have worked for less time than this, including a part-month calculation if they were taken in February) whichever is the higher. This will be subject to deductions for income tax and employee NICs in the usual way.

In its guide to calculating the grant HMRC says that employers will not be penalised for using the wrong method of calculation provided there is ‘a reasonable choice of approach’.

HMRC are calculating this based on calendar days and not working days and gives worked examples as to how to calculate the claim. Therefore although the employee only works Monday to Friday the three week claim for April will be 21 calendar days x £83.34. From 1 July 2020 claims will be made for a minimum period of a week but can be for more and claims cannot be made for overlapping months.

Q: What evidence of furlough is needed?

A: The HMRC and Treasury advice both now say that the employee must have confirmed in writing to the employee that they have been furloughed and a copy of the letter kept for five years. The employee does not have to agree in writing. The employer must also confirm the terms and conditions on which the employee must remain away from work and it must either expressly or impliedly vary the employee's contract. It is therefore important that all of this is contained in the furlough letter.

A collective agreement reached between the employer and the trade union is sufficient evidence for a claim.

It must be remembered however that reference to agreement in the guidance is only in respect of an ability to claim under the scheme. If an employee's wages have been reduced and there is no lay off clause in the contract then failure to obtain written consent may lead to claims for breach of contract or unlawful deduction from wages. There is also advice from accountants that HMRC will continue to tax the employee on their full salary if there is no signed agreement prior to the first payment being made.

From 1 July 2020 the employer must confirm in writing to the employee the agreement with them for them to return to work some hours/shifts/days and the employer will be responsible for paying them their normal wages for the time worked.

Q: What about employees on fixed-term contracts?

A: Fixed-term employees can be furloughed and their contracts can be renewed or extended during the furlough period. There is no minimum period left to run but they must not have ended on or before 19 March 2020. However, the 23 April guidance has now changed and confirms that if a fixed-term worker's contract ended after 28 February 2020 and they were on the payroll as at 28 February 2020 and an RTI submission to HMRC had gone in on or before that date, then they can be re-employed and furloughed. If their fixed-term contract ended after 19 March 2020 then provided they were on the payroll as at 19 March 2020 and an RTI submission made to HMRC on or before that date, then they can be re-employed and furloughed. However, if a fixed-term contract started and ended between 28 February and 19 March they are not eligible to be furloughed.

Q: Can employees employed by individuals be furloughed?

A: Provided that they were paid through PAYE then they can. This can apply to nannies, gardeners, etc.

Q: Do I have to furlough all my staff?

A: No, the decision to furlough is yours alone. However, if you have employees who are in the vulnerable groups and you do not furlough them then you face potential claims of failure to provide a safe place of work. Until 1 July 2020 those you do furlough cannot do any work for you including work which generates income or provides a service to you either directly or indirectly or any linked or associated organisation. In the guidance for employees there is a portal for employees to report employers who are attempting to abuse the system.

Q: Do employers have to top up the 80% to 100%?

A: No. The employer must pay the employee the grant it receives under the scheme (less normal deductions) but they do not have to top it up, although employers may want to.

Q: Do employers still have to pay 13.8% NICs?

A: Yes, but only until 1 August. They will be able to claim this on the 80% capped at £2,500. If the employer is a small employer and has claimed the Employment Allowance (which is £4,000 per year to offset against employer's NI costs) for that individual then they should not also claim 13.8% on the furlough pay. Statistics show that only 40% of employers are currently claiming for employers' NICs and so claims should be checked and submitted by 31 July 2020.

Q: Do employers still have to make pension contributions?

A: Yes, although they may agree with the employee to have a pension break so that the employee is not making their contribution and neither is the employer. Up to 1 August 2020 minimum auto-enrolment employer contributions of 3% can be claimed back by the employer provided these are actually paid into the pension by the employer.

Q: What if the employee has sacrificed salary for a benefit?

A: HMRC has confirmed that it regards the current crisis as a ‘life event’ and will allow employers and employees to agree to reverse these agreements provided this is done in accordance with their contract. However, subject to further guidance being given, then unless HMRC will allow any salary sacrifice to be backdated, the employer will only be able to recover 80% of the reduced salary before the sacrifice was reversed. HMRC has updated its salary sacrifice guidance.

Q: What if the 80% brings the employee down below the minimum wage?

A: As they will not be carrying out work for the employer then this is not a problem. However, if the employee is carrying out training for the employer whilst furloughed then they must receive minimum wage.

Q: Can the employee work for someone else whilst furloughed?

A: Up to 30 June 2020 the rules says that employees can volunteer whilst they are furloughed but not for their employer either directly or indirectly or for any linked or associated organisation. The employer can try and find employees volunteer or new work with other organisations provided it is in line with public health guidance. HMRC has confirmed that provided the employee is contractually able to work for someone else they can. Most contracts will not allow this unless the consent of the employer is given so it will be a decision for each employer. However, all employers taking on new staff have to complete a new starter checklist and Statement C must be completed to say if the employee has another job. After 1 July 2020 new rules come into effect in relation to returning to working for the employer which are set out below. It is not clear if employees will still be able to volunteer or work for others after that date.

Q: Can the employee do training whilst furloughed?

A: Yes they can and must be paid the minimum wage when training. The Treasury Direction of 22 May makes it clear that the employee can do training which improves the employee's effectiveness in the business or the businesses effectiveness but must not provide goods or services to the employer or on behalf of the employer to someone else.  

Q: Can we furlough employees multiple times?

A: Yes, provided each period of furlough is for a minimum of 3 weeks. Employees brought back off furlough must then be notified again of their furlough. However, an existing furlough period can be extended.

Q: Do we need the employee’s agreement to furlough?

A: You will need to check the employment contract. Some contracts have clauses which allow you to send home employees with or without pay if you do not have enough work. These are called ‘lay off’ clauses and are generally only found in employment contracts in industries such as manufacturing where they have peaks and troughs.

If you have such a clause in your contract you do not need your employee’s consent to furlough them and reduce their pay. If you do not have such a clause then you need their agreement to send them home on reduced pay as you are effectively varying the contract. However, most employees faced with redundancy or a guaranteed payment at least 80% up until 30 June 2020 are likely to agree. If you do not get their agreement in writing they may argue that you have not effectively varied their contract and claim breach of contract or unlawful deduction from wages going forward.

If you intend varying the contracts of 20 or more employees at one establishment as an alternative to redundancy then the collective consultation rules apply and where possible you should consult with the unions or, if none, elected representatives and file an HR1 form. However, as you are not making redundancies at this stage, you will not have to wait 30/45 days before furloughing employees. If there is no recognised union and no elected representatives then given that time is of the essence, employers will probably take a view that these are extraordinary circumstances and that they will take their chances in consulting directly with the employees and argue ‘special circumstances’ if the point is taken. As no-one is being made redundant at this stage then an employee cannot claim a protective award and if redundancies are then considered an employer must go through the full collective consultation.

Q: What if the employee does not agree to be furloughed?

A: If the employee does not agree then if necessary, you will have to proceed with a redundancy process, obviously considering all alternatives to redundancy before making a final decision. Remember that if there are 20 or more employees in one establishment then it is important to go through collective consultation which means consulting with a union or elected representatives if there is no union for a 30-day period (20-99 employees) or 45-day period (100 or more) and filing an HR1 form (failure to do this is a criminal offence).

Q: Can the employee still do some work for us?

A: Up until 30 June 2020 the answer is no - under the scheme at the moment the employee must do no work for you and this includes work which generates income or provides a service to you directly or indirectly or any linked or associated organisation. There is an on-line portal for employees to report fraud. You can help them find other work or volunteer roles (not for you, a linked or associated organisation) provided this is in line with public health guidance. So you could not reduce their hours or working days or alter their duties or ask them to work for another company in the group and claim money under this scheme. You are permitted to allocate business-critical tasks to non-furloughed employees. Employees are permitted to work elsewhere if their contract allows this - most contracts do not or ask that the employer’s consent is obtained. However, you may allow them train during this period, provided they are not providing a service to or generating income for you or any linked or associated organisation. If they are doing on-line training, they must be paid the minimum wage.

From 1 July 2020 furloughed workers who have been furloughed for a minimum of 3 weeks prior to 30 June 2020 will be able to return to work part time on whatever hours or shifts are agreed with their employer. The employer will be responsible for paying the employee their normal wages for those hours/shifts/days worked and claiming the balance from HMRC under the scheme. These agreed changes should be in writing and notified to the employee by the employer.

Q: If we have a lay-off clause in our contract do we have to seek agreement to furlough employees?

A: As you have a contractual term allowing you to send them home or pay them less then there is no question of a breach of contract or unlawful deductions claim and so although you do not need to get their consent you will still have to write to them telling them they have been furloughed and setting otu the terms and conditions of them staying away.

Q: Do we have to have started a redundancy process to be able to claim?

A: The Treasury guidance makes it clear that the scheme is not dependent on them being otherwise made redundant and the revised HMRC guidance makes it clear the scheme is there to save jobs and the economy.

Q: Can we furlough those employees who are shielding?

A: The guidance makes clear that those who are shielding in line with guidance from Public Health England can be furloughed, as well as those living with them.

Q: Can we furlough those who are off sick?

A: The HMRC guidance makes it clear that furloughing is not to be used for short-term absences for sick leave, especially as there is a three-week minimum period but it gives employers a choice. The Treasury directions makes it clear that if at the time the instruction to furlough is given employees are or should be on SSP then that period must come to an end first and this termination of sick leave should be by agreement between the employer and employee- which is slightly odd wording as it is normally determined by the health of the employee. SSP and the furlough grant cannot be claimed for the same period of absence.

The HMRC guidance also confirms that those on long-term sick can be furloughed but it also makes a point of saying those coming back from sick leave should be paid 80% based on their usual salary, the implication being that those on long term sick leave get paid 80% of what they would normally get on sick leave.

If a furloughed employee becomes ill then it is up to the employer whether they place them on SSP or leave them as furloughed. As it is likely that most employees will be much better off as furloughed it is difficult to see a situation when employers would do so.

Q: What about my employee who has to be away from work because they have caring responsibilities including their children who are off school?

A: Yes, these employees may be furloughed although there is no obligation to do so. From 1 July 2020 they could perhaps be brought back a couple of days a week to allow them to share childcare with their partner.

Q: We have employees on unpaid leave - can we furlough them?

A: Employees who were on unpaid sabbaticals or any other unpaid leave as at 28 February 2020 where the intended period of that sabbatical or leave is still running or where the conditional reason for them taking the sabbatical or unpaid leave has not taken place cannot be furloughed and they must come back on the intended return date and then be furloughed. The new Treasury Direction accepts that between 1 March and 20 March the employer and employee might have agreed to vary the unpaid leave to allow the employee to return early but any variations outside these dates will not allow the employee to be furloughed.

This also raises questions about whether this also catches those on maternity leave who have exhausted statutory maternity pay. Does this mean they cannot reach an agreement to come back earlier and be furloughed? We are having this urgently clarified. The HMRC guidance says that those in receipt of maternity allowance must give the full either weeks notice o return early but no such stipulation is made in respect of those in receipt of statutory maternity pay.

Q: Can a foreign national be furloughed?

A: Yes, as the scheme is not considered to be ‘access to public funds’ and employees on all types of visa can be furloughed.

Q: Can an apprentice be furloughed?

A: Yes they can and they can continue to train provided that they are paid minimum wage while they are training. This means that the employer might have to top up the 80% for periods of training. Additional guidance on apprentices has been issued and can be found here.

Q: What about student loans and the apprenticeship levy?

A: These must be deducted in the usual way.

Q: If an employee has two jobs can they be furloughed from both?

A: Yes. Equally they can be furloughed from one and not the other. It depends on the needs of the different businesses. However, if a worker has multiple employers but only works for one at a time, if a worker is laid off from the current employer, they cannot go to a previous employer to be furloughed.

Q: An employee left us to take up another role but that has fallen through and they have asked us to take them back - can we and do we have to?

A: The guidance now confirms that employees who stopped working for an employer after 28 February 2020 who meet the payroll criteria as at that date can be re-employed and furloughed, even if they re-employed them after 19 March. 

However, you are not obliged to re-employ. If you dismissed them for gross misconduct then there is going to be less enthusiasm to re-engage them. Also consider the basis on which you bring them back - is this just a delay to their termination date or are you bringing them back permanently? If the latter and you do not need them going forward, you will then have to dismiss them for a fair reason at some point in the future and give them notice. Any break is service of more than a week (Saturday to Saturday) will, as a matter of law, break continuity of service.

Q: Can we ask employees to take holiday during furloughing?

A: The government has confirmed that holiday will accrue during furlough and can be taken and that an employer can force an employee to take holiday during a furlough period.

Although legislation was introduced to allow employees to carry over holiday for up to two years if they have been prevented from taking it due to the pandemic, the guidance makes it clear that those on furlough are expected to take their holiday unless their employer cannot afford to pay them their full wages because f their financial situation.

Those on sick leave and maternity/adoption/shared parental/paternity leave cannot be asked to take holiday.

Q: How much should an employee be paid on holiday?

A:  Government guidance has also confirmed that employees must receive their normal pay when on holiday which can include overtime and commission provided it is regular and averaged out over the previous 12 months (from 6 April 2020). However, this is only for the 20 days of ‘European’ holiday and not for the additional 8 days for full-time workers which is a statutory requirement in the UK, or the additional contractual days over 28 given in employees’ contracts. Therefore employers with employees who earn significant commission may want to specify that the holiday is used up in a certain order so that the surplus over the 20 days ‘European’ holiday is used up first and commission does not have to be paid and then the 20 days ‘European holiday’ when it does.

In relation to pay for bank holidays, check contracts to see exactly how holiday is expressed and whether it is just 28 days or 28 days plus bank and public holidays or inclusive of them.

Although the HMRC employee guidance says ‘you can agree with your employer to vary holiday pay entitlement as part of furlough’ we believe this to be a typo as in the document showing how to work out your 80% it says ‘an employer and an employee can agree to vary holiday entitlement as part of furlough’.

Q: How do we select those to be furloughed?

A: If you have a group of people who all do the same job and only need half of them, then you will have to apply fair and objective selection criteria in deciding who stays and who is ‘furloughed’. This would have to be carried out quickly and probably based on what skills you will need in the short term. So, for instance, if you need some of the sales force you are going to select your best sellers to stay as they have the best chance of making sales. Bear in mind that decisions must not be discriminatory. 

Q: When making this selection, can we take into account individual circumstances such as the ability to work from home?

A: This would be a reasonable consideration but do not make stereotypical assumptions, e.g. all women with children cannot work from home as this may end up in a discrimination claim.

Q: Can we bring employees back temporarily off furlough and then furlough them again if we are not busy?

A: Up until 30 June 2020 furloughing must be for a minimum of three weeks and you can furlough staff multiple times - however each furlough period must be for a minimum of three weeks to be able to claim the grant. Be wary of entering into a furlough agreement for just three weeks as you will then have to keep seeking the employee’s agreement each time you want them to furlough for a further period. It would be better to say ‘until 30 June 2020 or such later date although we reserve the right to ask you to return to work for specified periods before placing you back on furlough’. After 30 June 2020 you can agree with your employee that they come back to do certain shifts/hours/days without this affecting your ability to claim the grant.

Q: If we go ahead and make an employee redundant anyway, without considering furloughing, is this likely to be an unfair dismissal?

A: Yes. We anticipate that while the scheme is cost neutral to an employer (up until 31 July 2020) a tribunal taking the view that the employer has not done everything possible to avoid redundancies and so those with over two years’ service may successfully claim unfair dismissal, subject to there being extenuating circumstances.

Q: What about employees on statutory leave such as maternity/adoption/paternity/shared parental leave?

A: If a pregnant woman is furloughed then calculation of her maternity pay at 90% for six weeks will usually be calculated based on her earnings in the ‘relevant period’ and so if these earnings were reduced due to furloughing then this may affect the 90%. However, as of 24 April, a statutory instrument confirms that the calculation must be made as if the employee was not on furlough and receiving her full pay.

If the employer pays contractual maternity pay which enhances statutory maternity pay, then the employee can be furloughed while on maternity leave and the employer can claim back 80% of the enhancement (capped at £2,500) under the CJRS but not 80% of the statutory maternity pay element as this can already be claimed back from the government.

If the employer does not pay enhanced maternity leave but tries to furlough an employee on maternity leave on 80% of her normal wages,  this will bring her maternity leave to an end. Therefore there is little point furloughing a woman on maternity leave if she is only receiving statutory maternity pay. It is not currently possible to pay less than the statutory minimum for statutory maternity pay. 

If a woman wants to return from maternity leave early she must give eight weeks notice to do so. However, if the employer has not written to her telling her when her maternity leave ends, there is no obligation to give eight week's notice to return. The new Treasury Direction casts doubt on whether a woman returning early from maternity leave can be furloughed. However, under the heading 'employees receiving maternity allowance' the guidance makes it clear that a woman must give eight weeks notice to return but the same stipulation is not made for those in receipt of statutory maternity pay.

Employees cannot be asked to take holiday during maternity leave.

When an employee returns from statutory leave then their normal salary should be the one used to calculate their furlough leave, not the salary whilst on statutory leave.

Q: Can we make employees who are furloughed redundant?

A: There is nothing to prevent an employee being made redundant whilst on furlough as a business may conclude that it will not recover or not recover within the timescales of the CJRS, but the guidance warns that ‘grants cannot be used to substitute redundancy payments’ and that HMRC will be closely monitoring this once the scheme has closed. The 30 April guidance makes it clear that union and non-union representatives can collectively or individually consult with workers while on furlough provided they are not providing services to the employer or generating revenue for them.

Q: What if the employee has two jobs?

A: They can be furloughed from both jobs and the cap applies to both. Or the employee can be furloughed from one and not the other. However, if a worker has multiple employers but only works for one at a time, if a worker is laid off from the current employer they cannot go to a previous employer to be furloughed.

Q: What if the employee was TUPE'd in after 28 February 2020?

A: The guidance now confirms that those TUPE’d after 28 February 2020 and also situations where the PAYE payroll succession rules apply or where payrolls have been consolidated, qualify to be furloughed.

It also confirms that the transferor can claim the grant for the period up to the transfer date, even if this is less than three weeks.

Q: If we are making 20 or more employees redundant in a 90-day period at one establishment, could we rely on the ‘special circumstances’ argument so that we did not have to collectively consult?

A: Based on current case law it is highly unlikely that any such argument would be successful, but the country has never before faced such a crisis as this and therefore it may be successful if argued now - see Covid-19 and collective redundancy consultation.

Q: If we are furloughing 20 or more employees at one establishment do we need to submit an HR1 form?

A: Yes, because you will have to start collective consultation then our advice is you should submit an HR1 and failure to do so is a criminal offence. We suggest sending a covering letter to explain that redundancies have been considered but currently avoided due to the furlough scheme and remember to keep it updated.

Q: What should be in a furloughing agreement?

A: Up to 30 June 2020 a furloughing agreement should include:

  • The employee’s agreement to be furloughed.
  • Confirmation of when that starts or started and that the employer may bring them back off furlough for periods of time and then re-furlough them.
  • If they have been made redundant then agreement that the redundancy has been withdrawn or the termination date varied and whether you require repayment of any redundancy payments or pay in lieu of notice which has already been made.
  • Confirmation of how the employer can bring the furlough leave to an end.
  • Confirmation that the employee will not be required or allowed to carry out any work directly or indirectly for the employer or any connected or associated business during the furlough period other than volunteering for third parties or training. If they are doing training they must receive the minimum wage.
  • Confirmation as to whether you will allow them to work for others during a furlough period.
  • What the employee will be paid and, if relevant, agreement by the employee to accept less than their contractual pay (less income tax and NICs).
  • If applicable, agreement that they may be asked to take statutory and contractual holiday entitlement during the furlough period (see above).
  • If there are any applicable statutory rights, e.g. maternity, shared parental or adoption leave and pay, confirmation that these will continue and if they were receiving enhanced contractual payments, agreement to reduce these to 80% of their contractual level, capped at £2,500 per month.
  • Asking the employee to ensure that the employer has up-to-date contact details for the employee and asking the employee to remain contactable.
  • Reserving the right for the employer to make unilateral changes to the scheme and telling them how any such changes will be advised to them.
  • Confirmation that all other express and implied terms of the contract of employment remain in force so remember to check if there are other terms that need to be varied.

After 30 June 2020 if agreement is reached with the employee to bring them back to work on a part-time basis then the details of this should be confirmed in writing to the employee.

Q: What do we need to make a CJRS claim?

A: You will need the following:

  • your ePAYE reference number
  • the number of employees being furloughed
  • National insurance and names of employees being furloughed
  • the payroll reference number of those being furloughed
  • your self-assessment or corporation tax unique taxpayer reference or company registration number
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number

You can currently only claim every three weeks and this can straddle months and be made in anticipation of an imminent payroll and the money will be paid via BACS. You must pay the whole of the grants received to the employee, less deductions for income tax and NICs without deducting any kind of admin fee. Further details on claiming can be found here. Calculations are based on calendar days and not working days. From 1 July 2020 claims can be for a minimum period of a week although they can be longer and claims cannot straddle a month. Claims can still be made in anticipation of an imminent payroll and the number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim under the current CJRS.

Q: How do we treat the CJRS grant for tax purposes?

A: Payments received by you under the scheme are made to offset these deductible revenue costs. It must therefore be included as income in your calculation of taxable profits for income tax and corporation tax purposes, in accordance with normal principles. You can deduct employment costs as normal when calculating taxable profits for income tax and corporation tax purposes.