The Chancellor has made a Treasury Direction under Section 71 and 76 of the Coronavirus Act 2020. Further supporting guidance and detail has been published by HMRC on the Job Retention Scheme (JRS) in accordance with this, and we summarise below the key points, providing clarification on many aspects and the various practicalities of the scheme, and answering some crucial questions employers have raised on the imminent availability of the platform.

Who can claim?
  • Crucially, the Government has announced a change to the reference date of employees who must have been on a payroll to 19 March 2020, the day before JRS was first announced.
  • It has been clarified that a Real Time Information (RTI) submission must have been made to HMRC notifying of a payment to an employee on or before 19 March 2020.
  • This benefits those employees who are on weekly or fortnightly payrolls who were employed after 28 February but before JRS was announced, on the proviso that they would have been notified to HMRC on an RTI submission on or before 19 March 2020.
  • Unfortunately, a monthly paid employee who was employed from, say 2 March 2020, would not qualify for the JRS as they would not have been notified to HMRC on an RTI submission by 19 March 2020.
  • Employees are to be furloughed for a minimum of three weeks, or 21 calendar days. However, rotating of furloughed employees within a business is allowed.
Employees made redundant or left after 28 February 2020
  • We have clarification that employees who were made redundant or who stopped working for an employer after 28 February 2020 but re-hired can still qualify even if reinstated after 19 March 2020. For these employees, the reference date that they must have been on the payroll remains as 28 February 2020.
Employees who are TUPE’d
  • Where a business is transferred to a new owner and the employees are TUPE’d they would still qualify for the JRS even if this transfer occurred after 19 March 2020. This is on the assumption that they would have been on the previous employer’s payroll on 28 February 2020.
How much to claim
  • An employer can claim 80% of an employee’s regular gross PAYE earnings (or reference pay), capped at a maximum of £2,500. In addition, the employer’s Class 1 NIC and the minimum 3% employers automatic enrolment pension contributions on the subsidised furlough pay can be claimed.
  • The reference pay to base the claim on is as per the last pay period prior to 19 March 2020. For monthly paid employees, this will be February 2020.
  • For employees who receive varied amounts, employers are to claim the higher of the following:
    • The same pay period’s earnings from the previous year, or
    • An average of the earnings for the 2019/2020 tax yearWhere such employees have been employed for less than a year, earnings are to be averaged for the period since they started until they were furloughed.
  • Regular earnings are any regular payments an employer is obliged to pay their employees. This includes wages, regular overtime, compulsory commission, etc. Any discretionary payments such as bonuses or tips are to be excluded.
  • Benefits in kind and any elements that are provided via salary sacrifice schemes are to be excluded, and all the furlough pay must be in the form of money. It is recommended that any contractual benefits or salary sacrifice arrangements are reviewed when placing an employee on furlough.
Public sector organisations
  • It is expected that most public sector organisations will not use the scheme as it is expected that they will be continuing to receive public funding. This also applies to other organisations who receive public funding.
  • There may be cases where organisations are not primarily funded by the Government and whose services cannot be used in the response to coronavirus, so the JRS may be appropriate for employees here. We can provide more information on this aspect.
  • Administrators are able to use the JRS where they have taken over the management of a business. It is, however, expected that that the employees being furloughed have a reasonable possibility of being re-hired by a new buyer of the business.
The claim and availability of the JRS portal
  • The HMRC portal whereby employers can submit their JRS claims is scheduled to be available on 20 April 2020.
  • There will be a dedicated HMRC helpline for those with questions on using the portal, we are yet to receive a note of this phone number. However, it is intended that the claim process will be structured such that HMRC is not expecting to be inundated with calls.
  • Claims can be made up to 14 days before a payroll is run.
  • HMRC are intending that funds should reach employers’ bank accounts between 4 and 6 working days of the receipt of a claim.

If you have any questions or would like to discuss the impact of Coronavirus on your business, please get in touch with your usual Campbell Dallas contact.

The information in this update should not be regarded as financial advice. This is based on our understanding on 17 April 2020. Laws and tax rules may change in the future.