The government has issued a new Treasury Direction that extends and modifies the Coronavirus Job Retention Scheme (CJRS) for the period from 1 November 2020 to 31 March 2021. The schedule to the Direction sets out the CJRS that applies from 1 November 2020 until 31 January 2021. A further Treasury Direction will be issued in due course setting out the CJRS that will apply from 1 February 2021.
The Chancellor announced on 5 November 2020 that the CJRS would be extended until 31 March 2021. An economic support factsheet was released on the same date, with official guidance on the extended CJRS published on 10 November. We outlined the key changes to the extended CJRS here, together with a number of questions that remained unanswered by the guidance.
The Treasury Direction sets out in greater and more technical detail how the extended CJRS will work and fills in many of the gaps in information about it. It is the formal legal basis for the extended CJRS. We draw attention to the following key issues of which employers should be aware:
Individual’s employment activities must have been impacted by COVID-19
The Treasury Direction confirms that claims may only be submitted under the CJRS in respect of an employee, “whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.” This suggests that there needs to be a connection between the employee in question and the effects of COVID-19 or measures taken in response to it. There is likely to be such a connection in most cases where an employer seeks to furlough an employee under the extended CJRS, including where:
- there is a reduction in the work available for the employee because of the impact of COVID-19 on the employer’s operations;
- the employee is unable to work because of childcare reasons arising from school or nursery closures due to an outbreak of COVID-19; or
- the employee is unable to attend work because they are Clinically Extremely Vulnerable to COVID-19 and there is not a role which they are able to perform from home.
This appears to confirm that employers can claim for employees under the extended CJRS where the employee’s personal circumstances are impacted by COVID-19, but the employer’s operations are largely unaffected.
However, there may be some instances where the relevant connection cannot be established and the employee falls outside the scope of the extended CJRS: for example, where an employee’s role is not affected by COVID-19, but the impact of the disease has resulted in the reduction in a second employee’s workload and the employer seeks to move that second employee into the first employee’s role (and to furlough the first employee). There is a risk that this course of action would be considered contrary to the purpose of the CJRS. That said, given the wide scale impact of the COVID-19 pandemic across all sectors of the economy, there will be very few cases where an employer will be unable to identify some adverse impact of the disease on an employee’s “employment activities”.
Information to be made public about employers who claim under the CJRS
HMRC will publish the following information about employers who submit claims under the extended CJRS in respect of December 2020 or January 2021:
- the name of the employer or the qualifying PAYE scheme;
- company reference number (if the employer has one); and
- the amount of the CJRS claim made by that employer (or a reasonable indication of the claim, rather than exact amount).
HMRC will publish this information within three months of the end of the calendar month to which the claim relates, by a notice on the gov.uk website and “by such other means as HMRC consider appropriate”.
HMRC have discretion to withhold publication of this information where they are satisfied that its publication will expose any person employed or engaged by the employer (or any of its partners or members), or any individual living with them, to serious risk of violence or intimidation.
Employers may prefer not to submit claims under the extended CJRS, even where they are technically eligible to do so, to avoid this publicity, especially where the employer’s business is profitable. However, the risk of negative publicity may be reduced where employers are listed as having submitted relatively low value claims.
From December, employers cannot claim for employees serving notice
Employers cannot claim under the extended CJRS in respect of any day in December 2020 and January 2021 on which the relevant employee is on notice of termination of their employment. It appears that employers may claim for employees serving notice in November 2020.
This new information may prompt employers to expedite the serving of notice on furloughed employees, eager to mitigate some of the cost of notice pay (at least in respect of the last half of November). Employers should, however, be careful to comply with any collective and individual consultation obligations, and to follow a proper process before serving notice, especially in relation to employees with two or more years’ service, in order to limit the risk of claims of unfair dismissal.
Determining the reference salary for employees on unpaid leave or sabbatical
The Treasury Direction confirms that, where the relevant reference period includes a period of unpaid leave or unpaid sabbatical, the reference salary should be determined on the basis of what the employee would have been paid for annual leave.
The Treasury Direction provides no specific rules on how to calculate reference salary for employees who have had a pay reduction, rather than being on unpaid leave. In the case of employees who were ineligible under the previous CJRS (for example, those hired after 19 March 2020), the relevant reference period is the last pay period ending on or before 30 October 2020. Where such employees have experienced a pay reduction that remains applicable during the last pay period ending on or before 30 October 2020, it appears that their reference salary is calculated on the basis of their reduced pay. This may result in a workforce comprising of two groups of employees: those whose reference salary is calculated based on their pay prior to the pay reduction (i.e. those eligible under the previous CJRS) and those whose reference salary is calculated on their salary after the pay reduction has been applied.
Claiming in respect of employees transferred from another employer
Where a TUPE transfer takes place after 31 August 2020, the new employer may claim a grant in respect of transferring employees despite the new employer not having a PAYE scheme registered on HMRC’s real time information for PAYE on or before 30 October 2020 (provided the employee met the qualifying conditions under the CJRS in relation to their former employer, including having a payment reported to HMRC between 19 March 2020 and the earlier of 31 October 2020 and the date of the transfer, and the employee’s employment not terminating before 23 October 2020). This may be relevant where the transfer takes place after 30 October 2020 and the new employer is newly incorporated.
Deadline for submitting and amending claims
The Treasury Direction sets out the following deadlines, although HMRC has discretion to extend these deadlines where the employer has a “reasonable excuse”:
- claims in respect of November 2020 must be submitted by 14 December 2020 and must be amended by 29 December 2020;
- claims in respect of December 2020 must be submitted by 14 January 2021 and must be amended by 28 January 2021; and
- claims in respect of January 2021 must be submitted by 15 February 2021 and must be amended by 1 March 2021.
CJRS Bonus now withdrawn
The Treasury Direction confirms that the Coronavirus Job Retention Scheme (Job Retention) Bonus is officially withdrawn. Employers are not permitted to claim for the Bonus and no payments will be made in respect of it.