6th April 2020

Updated Government Guidance: 3 Top Employer Tips For Ensuring Your HMRC Claim is Accepted

The Coronavirus Job Retention Scheme (“CJRS”) has been particularly hard to interpret due to the continually updated and changing guidance from the Government. We have found it difficult to keep in focus the main points of CJRS and have decided to publish our three top tips for employers who are furloughing staff and are wanting to ensure that they are the first to claim under the HMRC Claim Form. But first, our quick update below summarises some of the important updates to the CJRS released by the Government on Saturday 4 April 2020:

  • Employees who have been made redundant or have resigned to take another job from 28 February 2020 can be re-employed and furloughed.
  • Employees can be furloughed multiple times. Each period of furlough must be for a minimum of three weeks.
  • Apprentices can be furloughed.
  • Employers must notify employees in writing that they have been furloughed. A record of that communication must be kept for 5 years. Claims should be started from the date the employee finishes work and starts furlough.
  • If an employee has two jobs, they can be furloughed for each job. An employee who has been furloughed can go and work for another employer.
  • A director can be furloughed. There must be a formally adopted resolution from the board of directors, noted in the company records and communicated in writing.

Tip 1 – Ensure you (the employer) are eligible

Employers should ensure they have set up a PAYE scheme on or before 28 February 2020. They should also have a UK bank account and must have also enrolled for PAYE online to access the portal. After employers enrol, they will be sent a letter with an activation code within 10 days which will allow them to activate the service. If you are not online, then your claim cannot be processed.

Tip 2 – Keep a paper trail

The first step employers should take is to diarise when the employee has been furloughed. They should secondly diarise the day the grant under the CJRS comes to an end (currently 31 May 2020). In order to make a claim via HMRC, employers require to note the number of employees being furloughed and the claim periods.

HMRC are likely to be auditing companies after the scheme closes and will probably focus on smaller employers. Thirdly employers are required to keep the written notification of furlough leave in writing for a period of 5 years. Employers should also keep clear dates when the employee starts and finished furlough leave. Ideally, when an employee comes back to work from furlough leave they will be sent a letter confirming this. While not required (yet), this should also be kept with the initial written notification.

Tip 3 – Pay the employee correctly

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Due to the CJRS updates on Saturday (4 April 2020), employers can claim for any regular payments they are obliged to pay employees. This includes wages, past overtime, fees and compulsory commission payments. It is unclear what “past overtime” is however this is likely to be compulsory overtime. However, this does not include discretionary bonuses (including tips for waiting staff) and commission payments and non-cash payments. Therefore, matters like private medical health insurance and car allowances are not covered by the scheme.

For workers where pay varies on time worked (e.g. zero hours staff), this depends on the length of time they have worked for the employer. If the employee has been employed for a full twelve months prior to the claim, employers can claim for the higher of either the same month’s earnings from the previous year; or the average monthly earnings from the 2019-20 tax year. If the employee has been employed for less than a year, they can claim for an average of their monthly earnings since they started work.

Again HMRC requires the amounts claimed under the furlough scheme before they can process the claim.

If in doubt, take advice from your own solicitor or a member of the Blackadders’ Employment Team.

Duncan Milne,  Solicitor
Employment Law
Blackadders LLP

@EmpLawyerDunc

 

www.blackadders.co.uk

 

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