The Treasury has now published a formal direction to HMRC which sets out the legal basis for the administration of the Coronavirus Job Retention Scheme. The previously published guidance (now revised for the fourth time) needs to be read in the light of this direction.
The headline news is that the Treasury has agreed to move the cut-off point for employees who are eligible to be furloughed from 28 February to 19 March (the day before the Chancellor announced the broad outline of the Scheme). That means the employees in post as at 19 March can be furloughed, provided that they were notified to HMRC on a RTI submission on or before that date. So in practice, even if employees joined by 19 March, they may still be excluded from the Scheme.
The Direction also includes a considerable amount of technical legal content specifying exactly what payments to furloughed employees can be reimbursed under the Scheme, including the treatment of bonuses. As one would expect, these are broadly in line with the previously published versions of the guidance. There is also some extra detail about the relationship between furlough and sick leave, and the position of directors on furlough in relation to their statutory duties.
There is however one noticeable difference between the Direction and the Guidance when it comes to the evidence required to support an application under the Scheme. The Guidance says: “To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed.”. On the other hand the Direction says both employer and employee “must have agreed in writing” (which can be in electronic form) that the employee will “cease all work” in relation to their employment. It is not currently clear how significant this difference is, but employers will need to consider what further steps (if any) it would be prudent and feasible to take to document their furlough arrangements before making claims under the Scheme when the portal opens next week.
For further details of the Scheme, please see our article here.