HMRC appears to be adopting a pattern of releasing new and updated guidance on the Coronavirus Job Retention Scheme once many have signed off for the weekend (assuming you can escape your home office).
The Scheme portal is now open and accepting applications. There are early reports that HMRC may be trying to control the level of traffic on the portal, with some applications crashing whereas others have made successful applications. It is going to require patience and perseverance. Looking for the positive, those who have completed successful applications have confirmed that the portal is easy to use and as described in the Guidance.
The pre-weekend reading from HMRC includes two new guidance documents. One is a ‘step by step’ guide for employers on how to claim under the Scheme, setting out the information that they will need to provide and the processes they will need to follow (https://www.gov.uk/government/publications/coronavirus-job-retention-scheme-step-by-step-guide-for-employers). The other is a guide to calculating 80% of an employee’s wages for the purpose of claiming under the Scheme (https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme). This includes guidance on which payments can be taken into account (e.g. ‘regular wages’, non-discretionary overtime, non-discretionary commission payments) and which cannot (e.g. tips, discretionary bonuses, discretionary commission payments, non-monetary benefits).
HMRC are now on its fifth iteration of the Guidance for employers on the Scheme (https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme). The latest version attempts to clarify how an employer should place an employee on furlough. It states that employers must ‘confirm in writing to their employee’ that they have been furloughed, and that ‘if this is done in a way that is consistent with employment law’ then that will constitute valid consent for the purpose of the Furlough Scheme. The HMRC guidance goes on to say that ‘the employee does not have to provide a written response’. It would be fair for employers to feel confused. Unfortunately, this appears to conflict with the Treasury Direction to HMRC, published on 15 April, which establishes the legal basis for the Furlough Scheme. Paragraphs 6.1 and 6.7 of the Direction state that an employee can only be furloughed for the purpose of the Furlough Scheme if the employer and employee ‘have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment’. It is therefore unclear whether employers can claim under the Furlough Scheme for employees who have not specifically agreed in writing to being furloughed.
The separate HMRC guidance for employees has also been updated on 17 April. This document includes the first HMRC guidance on the question of holiday during furlough, although the employer guidance is silent on this issue. The guidance for employees states that workers continue to accrue holiday while on furlough, and that they are entitled to take holiday during this time. It goes on to state that holiday pay should be ‘your usual holiday pay in accordance with the Working Time Regulations 1998’, and that ‘employers will be obliged to pay the additional amounts over the grant’. This suggests that where furlough pay is 80% of normal wages, the employer will be required to make this up to 100% of normal (i.e. pre-furlough) wages for any period of annual leave. The guidance goes on to note that employers have the flexibility to restrict when leave can be taken if there is a business need (https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme).
The position is still unknown on whether an employer can compel an employee to take holiday while on furlough, thus depleting their holiday entitlement at the government’s expense. A number of leading employment barristers hold opposing views on this issue. Employers are in desperate need of clarification on how to approach holiday and furlough.
This note is a generic briefing and is not a substitute for detailed legal advice on the specific circumstances employers and employees are facing. You should therefore take legal advice.
