Over the past 10 days, various announcements and publications have been made by the Government with the apparent aim of adding clarity to its Coronavirus Job Retention Scheme, including details of how to apply for furlough payments from HMRC.
Below we identify questions that many business owners are asking and provide whatever clarification we can, based on the guidance published by the Government.
How do we apply for our furlough money from HMRC?
Last Friday the Government published guidance on how to apply. You will need to be able to provide the following:
- The number of employees being furloughed
- The dates employees have been furloughed to and from
- The name and National Insurance Number of each furloughed employee
- Your employer PAYE scheme reference number
- Your Corporation Tax Unique Taxpayer Reference, Self-Assessment Unique Taxpayer Reference or Company Registration Number, as appropriate for your entity
- Your UK bank account details
- Your organisation’s registered name
- Your organisation’s address
When can we apply?
Applications opened on Monday of this week (20th April 2020). The Government states that a calculator will be available to assist you in calculating how much you can claim.
How long will it take for the payments to come through?
The guidance states that it will take at least six working days for the cleared money to reach the employer’s bank account.
Has anything changed from previous guidance?
Yes, previously the Government had announced that you could not furlough anybody who had joined your company after the end of February 2020 but that date has since changed. The date is now 19th March 2020 – but be careful. The relevance of this date is not whether the employees had joined your company by that date; it is whether your company had provided HMRC with an RTI (Real Time Information) submission notifying payment in respect of that employee on or before 19 March 2020.
This was announced as a favourable change, meaning that people who joined in early March could now be furloughed. However, if you had not provided HMRC with the required details for that person by 19th March, it won’t enable you to furlough them. In fact, somebody who joined in late February but for whom the RTI submission to HMRC had not been made by 19th March will now seemingly not be eligible to be furloughed when previously it appeared clear that they would be.
Further, previously we had been told by the Government that furloughing could only apply to people you would otherwise have laid off or made redundant. The latest guidance widens the scope of the Scheme to include anyone who is furloughed “by reason of circumstances as a result of Coronavirus or Coronavirus disease”.
Given the latest wider definition of who can be furloughed, it also now seems to be the case that if somebody is advised to shield in line with public health guidance or needs to stay at home with somebody who is shielding, you can go ahead and furlough them. Previously, this would have appeared problematic if you would not otherwise have laid them off or made them redundant, but now this would presumably come under the definition of “by reason of circumstances as a result of Coronavirus”.
It would also potentially open up the possibility of employers furloughing those employees who have had no choice but to stay off work and look after their children following the closure of their children’s schools. Initially it seemed that those workers would be entitled only to the statutory right to unpaid time off to care for dependants in an emergency.
How important is it that we have actually agreed with the employee that they are furloughed?
On the latest guidance, it is absolutely essential. It appears that merely telling them they are furloughed will not suffice. It is unclear as yet how closely HMRC will scrutinise the extent to which agreement has been reached between the employer and the employee, but employers should make sure they have written evidence that furloughing has been agreed and that the employee has been specifically told they are being furloughed.
Thankfully the guidance to HMRC sent by the Government specifies that agreement reached by email is acceptable, which we would have expected all along, particularly as many people are now working remotely.
What does the latest guidance say about company directors?
It had already been made clear that directors who are employees can only be furloughed if they do not carry out any of their employment duties. But last week’s guidance went further than this, making clear that the only directorial duties a furloughed director can carry out are those duties imposed by Acts of Parliament.
Is there any further guidance about furloughing when somebody is off sick?
Yes, there is a considerable amount of fresh clarification in this area.
The guidance makes clear that short term sickness absences should be covered with SSP rather than furloughing. However, it goes on to say that if an employer wishes to furlough somebody for “business reasons” but the employee is currently off sick, they can still furlough them. The employee then stops being classed as off sick and is instead treated as being furloughed. This goes against previous guidance given by the Government, which implied that somebody off sick or self-isolating could only get SSP and that they could be furloughed once they were fit to return to work.
What if somebody we have furloughed becomes ill?
The latest guidance says it is up to the employer whether they keep the employee on furlough pay or move them onto SSP. It is perhaps difficult to envisage why an employer would wish to curtail the furlough period and move the employee onto SSP in such circumstances, but it is a stated option. What is not made clear is whether an employer can do this in the minimum 3 week furloughing period or whether doing so would invalidate the furloughing of the employee altogether.
Has anything else of importance changed to the scheme?
The furloughing end date has been extended from 31st May 2020 to 30th June 2020 to take account of the recent time extension of the lockdown measures. It is possible it could be moved back even further depending on how the national situation progresses.
Does the directive given by the Government to HMRC help to clear up any of the confusion surrounding holiday entitlement and the taking of holidays by furloughed workers?
Sadly not – we all still await clarification on how holiday rights will interact with furloughing. Many commentators believe that employers can require employees to take holiday during the period they are furloughed, just in the same way that an employer could require an employee to take holiday at other times, but until this is made clear by the Government, it is obviously risky for employers to rely upon it. After all, the Government has not merely been adding clarification to the guidance it gave previously; in some instances it has been changing its guidance altogether, such as in the case of the cut off date change from the end of February to 19th March and the criteria for a worker to be furloughed, both of which are discussed above.
*Please note that due to the nature of the sudden introduction of furloughing, the law in this area remains open to a wide range of interpretations and is continuing to be formulated by the Government. Therefore, whilst the above sets out the best guidance we can give based upon the latest Government publications, we feel it is important to emphasise that it is not to be treated with the same degree of reliance as other legal advice we give would be.