A further Treasury Direction has been published providing the legal framework to the extended Coronavirus Job Retention Scheme (CJRS). The most notable change is that, with effect from 1 December 2020, the CJRS can no longer be used to cover pay during notice periods.
Key considerations include:
The Treasury Direction – The new Treasury Direction extends the CJRS until 31 March 2021, however it only sets out the detail for the CJRS until 31 January 2021. We can expect a further direction in due course covering the mechanics of the scheme for the period 31 January 2021 to 31 March 2021.
Job Retention Bonus - The Coronavirus Job Retention Bonus is formally withdrawn under the Treasury Direction.
Notice provisions – As intimated in the initial guidance and confirmed in the updated guidance, claims cannot be made for a day that an employee is serving notice of termination between 1 December 2020 and 31 January 2021. The updated guidance states:
"For claim periods starting on or after 1 December 2020, you cannot claim for any days on or after 1 December 2020 during which the furloughed employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation). If an employee subsequently starts a contractual or statutory notice period on a day covered by a previously submitted claim, you will need to make an adjustment."
The Treasury Direction confirms the above position. The Treasury Direction only refers to the generic term of "notice", however the guidance refers to both statutory and contractual.
Employers which were seeking to rely on the CJRS to cover notice periods will need to carry out an urgent review. Many employers which are in financial difficulties may take immediate action and serve notice of termination to ensure the CJRS can be used to cover some of the notice period up to 1 December 2020.
Publication of CJRS claimant details – The latest guidance made it clear that employers claiming under the CJRS will be named. The Treasury Direction provides a clear outline of the "employer information" that must be published by HMRC, including:- the name of the employer or the qualifying PAYE scheme,
- if the employer has a company reference number, that number, and
- the amount of the CJRS claim made by that employer.
Employee agreement - As set out in our previous Legal Update it is essential for the employer and employee to have a written agreement covering the furlough arrangement. The key requirements under the Treasury Direction are that the agreement (including a collective agreement):
- is made before the beginning of the period to which the CJRS claim relates (but may subsequently be varied to reflect any variation agreed between the employer and employee during the period to which the CJRS claim relates);
- is incorporated (expressly or impliedly) in the employee’s contract, and
- is made in writing or confirmed in writing by the employer (such agreement or confirmation may be in an electronic form such as an email).
The agreement (including a collective agreement) or confirmation must be retained by the employer for at least 5 years after it is made (or subsequently varied).
Conclusion
The Treasury Direction sets out the much needed legal parameters for the CJRS. Employers should also familiarise themselves with HMRC's extensive guidance as set out in our previous Legal Update. The CJRS is constantly evolving and it is essential for employers to keep up-to-date. A top priority at this stage is to ensure there is an up-to-date, robust furlough agreement in place before the beginning of the claim period to which it relates, providing as much flexibility as possible.
If you need any assistance with the issues raised please do not hesitate to contact a member of the UK employment team.
