Coronavirus update 6 – 7 April 2020
More details on the Coronavirus Job Retention Scheme (JCRS)

Once again, this newsletter is directed at our employer clients, as this is the main area where clarifications have been issued. Additionally, we now need to advise employers that they may need to take an immediate initial step to claim the CJRS grant later this month. So, if you are not an employer, feel free to wait for our next update, but you will be pleased to note that this newsletter is rather shorter than the last one!

As mentioned in our last newsletter, the scheme is not open yet, but a few more points in preparation:

URGENT – Register for PAYE Online Now
HMRC are going to require you to be able to access PAYE Online. Most employers should be registered for this service, but if you aren’t, go to https://www.gov.uk/paye-online/enrol to register. If you originally registered for PAYE electronically, or you use the HMRC online software to maintain your payroll, you should already be registered. If you have a government gateway account for your business (e.g. to file VAT online), then you should be able to apply to add your payroll to it.

We have prepared a more detailed guide if you need further assistance – please contact us if you run into difficulties. We will try and help as much as we can.

If we maintain your payroll, then we believe that we can deal with this for you under our agent authority, and hopefully you will not need to do anything. But please do be patient – we are learning how to deal with all of this too! Nikki is going to need more time to process all of our payroll clients this month.

What you will need to make the claim
We understand that the online portal will open on Monday 20 April, and that is not far away. The government have said that you will need the following to register and make your claim:

• your “ePAYE” reference number – at the moment we believe that this is just your normal PAYE reference
• the number of employees being furloughed
• the claim period (start and end date)
• amount claimed (no less than the minimum length of furloughing of 3 consecutive weeks)
• your bank account number and sort code (this needs to be a UK bank account)
• your contact name
• your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

Calculating the furloughed pay
Initially, the government said that “Bonuses, commissions and fees are not included as part of your monthly earnings.” But they have now clarified this, and contractual commission, fees etc. do now count towards monthly earnings. So we can now confirm that you need to apply the golden rules to the following earnings:

• a) Normal monthly salaries.
• b) Contractual commission or fees.
• c) Contractual overtime.

But you cannot include:

• d) Discretionary commission or fees.
• e) Discretionary bonuses, e.g. Christmas bonuses.
• f) Tips.
• g) Non-cash payments, e.g. benefits in kind.

And to remind you, the golden rules are:

• You cannot pay your employees less than what you are claiming.
• You cannot claim more than £2,500 per month per employee (plus the associated employer’s NI and pension contributions as mentioned above).

So, for those who are on a regular monthly salary, then you simply apply the 80% fraction to that salary, and that is the claim that you can make.

But if your employee has variable pay, then you can claim the higher of:

• i. The earnings in the same month last year, and
• ii. The average monthly earnings in the 2019/20 tax year.

So, in order to arrive at both figures, include the permitted items above (a to c), but exclude the others (d to g).

If your employee started work after 6 April 2019, and they are on variable pay, then their furloughed pay can only be based on (ii) above, and you need to calculate the average monthly pay based on the 2019/20 earnings.

Employers of domestic staff
One bit of good news for individuals who are employers (e.g. you employ a nanny or domestic staff) – the CJRS is available to you – this has now been specifically confirmed by the government. We were worried last week that they were not included.

If your employee undertakes training whilst furloughed
I did touch on this in my last newsletter. Employees are not allowed to do any work for you whilst they are furloughed, but they can undertake training. But if they do, you do need to make sure that their pay at the reduced 80% level is sufficient to cover the relevant minimum wage. This might be the National Living Wage, the National Minimum Wage or the Apprentices Minimum Wage. If the 80% rate is below the relevant minimum wage for hours spent training, then the employer must top this up. But the claim under the CJRS will remain at the 80% level.

Interaction between furloughing and holidays
The government hasn’t published any detailed guidance on the interaction of furloughing and holiday pay, but a leading barrister has provided some guidance which we summarise here. But do please bear in mind that this is all uncertain at present, and if in doubt, we do recommend that you err on the side of caution, and take legal advice as necessary.

1. It seems clear that holiday entitlement does still accrue as normal whilst an employee is furloughed. The employee is still employed, and a minimum of 20 days annual leave (plus the statutory bank holidays) must be granted to all employees under EU law. Remember that we are still subject to EU law until at least 31 December 2020.
2. My view is that the agreed holiday entitlement should continue to accrue, not just the statutory minimum. So, if you grant your employees extra days of holiday, perhaps to reflect length of service, or if they have sacrificed salary in exchange for extra holiday, then that should still accrue in full. So, to take a straightforward example – you furlough the employee for a month, and they are normally entitled to 24 days holiday a year (plus the bank holidays) – then the employee will accrue 2 days holiday during the period of furlough.
3. However, if an employer chooses to, it seems that there is no barrier to require employees to take holiday leave whilst on furlough. Many employers will want to reduce the amount of annual leave to be taken once work resumes. BUT you must follow the correct procedure, which is to give the employee sufficient notice that you require them to take holiday. The requirement is that you need to give the employee at least double the amount of notice that you want the employee to take as holiday. So, for example, you decide that your furloughed employee should use up one week of their holiday entitlement whilst furloughed. In which case, you need to give them two weeks’ notice that they will need to take one week’s holiday. So, if you do this when you furlough them for the minimum three week period, then you will fine. Any later, and you will need to keep them furloughed until the holiday is taken.
4. But the barrister’s view is that any period of holiday that you require employees to take must be paid at full salary, not at 80%. This view is once again based on EU case law. You will still be able to recover 80% of the cost (subject to the normal maximum claim of £2,500 per month), but you will need to cover the extra 20% cost (plus employer’s National Insurance and pension contributions).
5. The barrister also leaned towards the same position on bank holidays – do these have to be paid in full, whilst the employee is furloughed? My original feeling was that they would only need to be paid at 80%, as it cannot have been the intention of the government to require employers to top up salary for a couple of days, if an employee’s furlough period includes Easter. But the barrister argues that the Working Time Regulations probably apply here, so full pay would be obligatory. Given that we have a number of bank holidays coming up, I feel that we need to know, and soon! You may feel that it is safer to err on the side of caution, and pay the employee full pay for bank holidays, even though you will only be able to claim 80% back.

As with a lot of the guidance on the government support schemes, the detailed interpretation is severely lacking, and it makes it very difficult to advise clients how they should act. We are keeping a close eye on any changes, and will keep you updated as and when we obtain more guidance.

If you have any questions, please do email your regular contact or at mail@busbys.co.uk. Thank you again for taking the trouble to read this newsletter.