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On 22 May, the Government published a further Direction relating to the functioning of the CJRS. This updated direction changes the end date of the CJRS scheme from 31 May to 30 June; the already-announced extensions of the CJRS beyond the end of June are not covered by the updated Direction, so a further direction will be required to address the workings of the CJRS from July to October.
This updated Direction provides some clarity on certain areas, deals with some inconsistencies with the Guidance published by the Government, and makes some changes to the rules of the Scheme.
Employee Agreement to Furlough
The updated Direction provides clarification on the agreement employers need to seek from employees when putting them on furlough. The updated Direction requires the employer and employee to agree to the furlough, but has relaxed the requirement around documenting that agreement, and now requires the agreement to be in writing or to be ‘confirmed in writing’.
The updated Direction also requires that the agreement or confirmation is retained by the employer until at least 30 June 2025.
Calculating 80% of pay
In calculating the 80% figure, no account is to be taken of anything which is not regular contractual salary or wages. The updated Direction clarifies that no account is to be taken either of benefits in kind, or anything provided or made available in lieu of a cash payment otherwise payable to the employee (including salary sacrifice schemes).
Statutory Sick Pay
Employers and employees can now agree to end a period of statutory sick pay (SSP) in order to start furlough, regardless of continuing SSP eligibility. The Direction requires an agreement between employer and employee in all cases as to the date when SSP stops, including cases where the SSP entitlement is not being brought to a premature end by that agreement.
A director will not be treated as doing work for the purposes of the CJRS where they are making a CJRS claim for, or making a payment of salary or wages to, an employee of the company.
Study and Training on Furlough
The updated Direction clarifies that furloughed employees can only undertake study or training if:
- its purpose is to improve an employee’s effectiveness in the employer’s business, or the performance of the employer’s business, and
- it does not otherwise provide a service to the employer or the business activities of the employer, or contribute to the business activities of the employer or anything generating income or profit for the employer, and
- it does not directly contribute to any significant degree in the production of goods the employer intends to apply to another person as part of the making of a supply of goods or services for a consideration to that person, or the making to any person of a supply of services for a consideration by the employer.
Permitted activities by furloughed trustees of occupational pension schemes
One of the permitted exceptions for work during furlough is where that work is undertaken by an employee for the sole purpose of fulfilling their duties as a trustee or manager of an occupational pension scheme. This exception does not apply to persons who are independent trustees and whose employer’s business activities include the provision of services as a trustee or manager of the scheme, or requiring the employee to undertake duties as an independent trustee of the scheme.
Where a TUPE transfer occurs
Where a TUPE transferee (new employer) does not have a qualifying PAYE scheme, a claim may still be made by the transferee in respect of a ‘relevant transferred employee’. The updated Direction has clarified the definition of ‘relevant transferred employee’, as the relevant date for TUPE transfers has now been changed from 19 March to 28 February, i.e.:
- such employees must now have been employed by the transferor (former employer) on 28 February 2020, and
- the employee must have transferred to the transferee (new employer) after 28 February 2020.
The updated Direction also clarifies that ‘relevant transferred employee’ also includes situations where the transferor (former employer) became insolvent.
Whether the updated Direction will apply to a claim under the CJRS
A claim for payment under the CJRS must be made in accordance with the updated Direction if the claim is made after the day on which the Direction was published (22 May). Claims made before the updated Direction were published (i.e., before 22 May) must comply with the first Direction; however, if a claim made before 22 May would have complied with the updated Direction anyway, then the updated Direction will apply to that claim generally.
Employers should ensure they familiarise themselves with the new Direction and keep up to date with the Government’s guidance. For advice on the CJRS, please contact a member of the Employment Team.