16 April 2020

HM Treasury releases new guidance on job retention scheme

There's a suite of updates for employers on who qualifies and how furlough should be implemented

Moments after publishing the updated Coronavirus Job Retention Scheme (CJRS) guidance, HM Treasury issued a Direction to HMRC under powers conferred by the Coronavirus Act 2020.

For the most part, the additional details in the Direction reflect the amended guidance.

However, there are some key headlines:

  • To claim, the employer must have a pay as you earn (PAYE) scheme registered on HMRC’s real-time PAYE information system on 19 March 2020.

  • The salary reference date for calculating the claim for salaried employees is the latest salary period ending on or before 19 March 2020.

  • The Scheme is not limited to employees who would have been otherwise made redundant. Instead, it applies in respect of “furloughed employees arising from the health, social and economic emergency in the United Kingdom resulting from coronavirus and coronavirus disease”. So the scope is much broader than may otherwise have been the case. However, the Treasury do warn that no claim can be made if it is “abusive or otherwise contrary to the exceptional purpose of CJRS”.

  • To claim furlough, the employer and employee must have “agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work”. Given that the last guidance only required “notification”, the need to also obtain agreement goes much further than this. This is a very important change. Employers will need to make sure that they have written confirmation from the employee that they agree to be furloughed and that they will not carry out any work for that employer.

  • Employees on sick leave can only be furloughed once the period of sick leave has ended. This is different to the guidance that was issued on Thursday, which said that employees on sick leave could be furloughed. However the Direction agrees with the most recent guidance that if an employee becomes sick while furloughed, that sickness can be disregarded.

  • The amount of salary for the employee must disregard anything that is not “regular salary or wages”. This means that performance bonus and discretionary payments cannot be included (including tips). Any conditional payments and any non-financial benefits must also be disregarded.

  • The employer cannot claim for any salary which is “conditional on any matter”. This could potentially mean that where employers have agreed that salary payments are conditional on the CJRS paying out, those salary payments would not be covered. Employers will therefore need to check their agreement with the employee in this regard.

Coming soon

We're in the process of compiling an amended guide to the CJRS which will pull together all the information from the various sources. We will send that out in due course.

Here if you need us

Call Oliver Tasker at our Lincoln office on 01522 515 987 or email oliver.tasker@wilkinchapman.co.uk or

Katie Davies in our Grimsby office on 01472 253 917 or email katie.davies@wilkinchapman.co.uk

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