COVID-19 FURTHER UPDATE: THE CORONAVIRUS JOB RETENTION SCHEME
28th April 2020
An update to this article can be found here: https://www.wjm.co.uk/news/covid-19-further-update-the-coronavirus-job-retention-scheme-26-may-2020
HMRC have issued what is now the seventh version of the employer guide. The main changes are tweaks in the sections dealing with new recruits, ex-employees and fixed term contracts. There is also some reference to Trade Unions. You can find the link to the latest update here:-
Here is the summary of the main points:-
• The employer guidance begins by saying that employers can only claim for furloughed employees who were employed on 19 March 2020 and who were on the PAYE payroll on or before that date, i.e. a Real Time Information Submission (RTI) notifying payment in respect of that employee had been made to HMRC or on before 19 March 2020. There is now a table seeking to clarify those employees who are potentially covered by the Scheme which is as follows:-
• In terms of new recruits, taking this at face value, it still seems to be the case that not all employees who started work in late February/early March will be eligible to be furloughed. For example those employees who joined in late February/early March but were not paid and an RTI submission made in respect of them by 19 March will still be disqualified. This is clearly designed to ensure that HMRC has some prior independent record of those people against which a furlough claim for them can be checked;
• Employees who left their old employer can be taken back on, put on furlough and a claim made in respect of them under the Scheme. That principle is not new (although there is further detail in the latest guidance about which employees are covered), but it does conflict with advice issued from HMRC – where an office closure had been decided pre-virus to take effect from the end of May, HMRC would not allow that to be delayed and a claim made for June, since neither the date of closure nor the reason for redundancies related to COVID-19. That would suggest that you can take people back on and furlough them regardless of whether they left for virus-related reasons, but you cannot keep them on and furlough them if they would otherwise have left on other grounds. As a consequence, given this uncertainty around the relevance of reason for termination to eligibility under the CJRS, our reluctant advice is to recommend not rehiring those who left for non-virus related reasons;
• There is some new wording in the guidance dealing with fixed term contracts, following some confusion about whether employees in such contracts that expired mid-furlough can be re-employed and furloughed. The stated position to date has been that they can, although there are a number of separate reasons why this might not be a great idea for the employer, it now says that an employee on a fixed term contract can be re-employed, furloughed and claimed for but only if either;
Their contract expired after 28 February and an RTI payment submission for the employee was notified to HMRC on or before that date, or
Their contract expired after 19 March and an RTI payment submission for the employee was notified to HMRC on or before that date.
• Employees that started and ended the same contract between 28 February 2020 and 19 March 2020 will not now qualify for the Scheme. If the employee’s fixed term contract has not expired, it can be extended or renewed and employers can claim for these employees provided an RTI payment submission for the employee was notified to HMRC or on before 19 March. This does not mean that employers must extend fixed term contracts. There may be good reasons why this is not appropriate;
• Employers should however bear in mind that non-renewal of a fixed term contract will amount to a dismissal for unfair dismissal purposes if the employee has two years or more continuous service, they should ensure that they have a fair reason for not renewing the contract. Employers should also be aware that if an employee is eligible to be furloughed, this may be a factor that a Tribunal will take into account, at least subconsciously, when deciding on the fairness or otherwise of a dismissal. Any renewal should be on terms allowing an early termination by the employer if conditions do not permit a long term extension, so no need to renew or extend on more than statutory minimum notice.
Please remember that we at WJM are here to help during this exceptionally difficult time, please don't hesitate to get in touch if there is anything you think we can help with.
For any advice in relation to any particular aspects of the above, please contact a member of the Wright, Johnston & Mackenzie Employment team: Liam Entwistle (firstname.lastname@example.org), Martin Stephen (email@example.com), Andrew Wilson (firstname.lastname@example.org) and John Grant (email@example.com)
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