Recently, I wrote about the UK Government’s guidance on the Coronavirus Job Retention Scheme (CJRS) – the versions published on 26 March 2020, updated on 04 and 09 April 2020. This made clear that 28 February 2020 was a crucial date for HMRC and employers, not least the following statement: Employees hired after 28 February 2020 cannot be furloughed and claimed for in accordance with this scheme.

However, staff made redundant since 28 February 2020 were covered if re-hired by their ex-employer.  In the guidance dated 04 April, this was relaxed when it included employees that had left voluntarily, (only to see that job fall through as a result of the pandemic) who would also be covered by the scheme.  Whilst the original guidance said that the ex-employer could re-hire the ex-employee, the 04 April 2020 guidance said that they could be re-employed.  Re-hiring an ex-employee (on the previous terms and conditions) and re-employing (on new terms and conditions) are two very different things.

In Practice

The guidance seemed clear:

  • The CJRS was not open to employees who started on or after 29 February 2020, YET
  • If an employee was made redundant as a result of the pandemic, or left of their own choice to go to another job which fell through, they could can be re-employed / re-hired

I have heard many cases of ex-employers who felt pressurised to give a job back, especially to an ex-employee that left of their own volition.  I have even heard a case (in my own family) where the DWP have refused to open a case for Universal Credit unless they are provided with a letter from the ex-employer confirming that they will not re-hire / re-employ the ex-employee.

It is important for employers to realise that there is absolutely no obligation to re-employ or re-hire ex-employees.  There is also no obligation on them to write a letter explaining why they will not be re-employed / re-hired.

Unfair

In my original article, I looked at the intentions of the CJRS:

  • Retain employees
  • Furlough them and pay them, then
  • Reclaim from HMRC

I speculated that it was not fair to have two lines in the guidance that must have applied as at 28 February 2020:

‘On your PAYE payroll’

This meant that an individual had to have been paid by the employer on or before 28 February 2020 and a Full Payment Submission (FPS) sent to HMRC on or before 28 February 2020.

This means that the following examples would not be covered:

  • The new starter on a weekly payroll paying in arrears. For example, a pay reference period from 24 February to 01 March 2020 paying on 06 March 2020.  This new starter would not have been on the FPS to create an employment record on or before 28 February 2020.  If they have been furloughed, their employer will not be able to reclaim the monies from HMRC
  • The new starter on a monthly payroll, say, on 24 February 2020 who missed the payroll cut-off for that month. Normally, this individual would have been paid with backpay in March 2020.    They were employed on or before 28 February 2020, Income Tax and National Insurance would have been due from their start date and the employer would have regarded them as being ‘on the PAYE payroll’.  However, if the employer had made the decision in good faith to furlough them, they would not have been able to reclaim furloughed salary from HMRC.  Just because they were not paid on or before 28 February 2020 and the FPS sent
‘Created and started a PAYE payroll’

In all of the guidance versions (26 March, 04 and 09 April), an employer had to have created a PAYE scheme on or before 28 February 2020 and actually started paying people through it and submitted at least one FPS.  Again, this was to ensure that employment records were created on HMRC’s systems.

If a totally new employer hired all staff on or before 28 February 2020 but did not pay until March 2020, any staff that had been furloughed would not have been within the scope of recovery under the CJRS.

———————-

Not fair, not right and not within the intentions of the scheme.

Change!

On 15 April 2020, the CJRS guidance was amended again.  This is an important change.  The 28 February 2020 date has been changed to 19 March 2020.

Why 19 March 2020?

The 19 March 2020 date must reflect the fact that this is the day before the Chancellor of the Exchequer announced the CJRS to help employers and employees.

So, now we have a totally different situation with regards the lines above that were fundamentally unfair and not in accordance with the intentions of the scheme:

‘On your PAYE payroll’

The line that said ‘You can only claim for furloughed employees that were on your PAYE payroll on or before 28 February 2020’ has changed to:

You can only claim for furloughed employees that were on your PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI submission on or before 19 March 2020.This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 19 March 2020

This is very clear.  The employee must have been paid on or before 19 March 2020 and the FPS containing this pay information must have been sent to HMRC on or before 19 March 2020.  As before with the 28 February 2020 date, this is all for the purposes of HMRC being able to audit reclaim grants – i.e. if a reclaim grant is claimed for someone that was not paid and reported to HMRC on the FPS on or before 19 March 2020, the claim will be disallowed.

Reports today indicate that this will bring a further 200,000 employees within the scope of the scheme.  Although, employers will have made the decision on which employees to furlough or lay off many weeks ago – employers cannot hang around waiting to see if and when guidance will change!

In respect of the two examples above:

  • The new starter on a weekly payroll paying in arrears (using the pay reference period 24 February to 01 March 2020 paying on 06 March 2020). This new employee WOULD have been paid on or before 19 March 2020 and the employer WOULD have sent a FPS RTI submission.  From being outside the scope of the CJRS, they are now within scope
  • The new starter on a monthly payroll, say, on 24 February 2020 who missed the payroll cut-off for that month. Depending on the payday, this person may now be within scope of the CJRS.  However, if the monthly payday was on or after the 20th of the month, this new starter who was employed would not be within scope

We had to wait until 15 April 2020 to get clarity on this.  The change of date from 28 February 2020 to 19 March 2020 will help some employees, particularly those on weekly, fortnightly and lunar payrolls.  It may not help the employees that happen to have been paid after 19 March 2020 for the first time.

Given that the scheme is only open until 31 May 2020 and employers will have already made their furloughing decisions, I question again whether this is too little and too late.

‘Created and started a PAYE payroll’

Previous guidance indicated that employers must have ‘created and started a PAYE payroll scheme on or before 28 February 2020’.  That has changed to:

‘Created and started a PAYE payroll scheme on or before 19 March 2020’

This is welcome news as it brings on board many new employers that may have set-up since the original date, only to face disruption when the Prime Minister Boris Johnson made a television address to the nation on 23 March 2020, announcing a ‘lockdown’ taking effect the next day.

Does it cover all employers?  Probably not.

Still Forgotten Employees

Firstly, remember the intentions of the scheme:

  • Retain employees
  • Furlough them and pay them, then
  • Reclaim from HMRC

Does the change of date help?  Of course.  However, there are still many employees that were outside the scope of CJRS reclaim before and will remain outside of scope now, particularly monthly payrolls I would have thought.

The implications

Employers, payroll departments and software developers will be frustrated up and down the land.  Furloughing decisions and contractual changes to pay will have been made by now.  Half-way through the operation of the scheme, we cannot just undo this and start all over again.

Think about:

  • Employees that were once outside scope that are now within the scope of the CJRS
  • Employers that were previously outside but are now inside scope
  • The line that used to say ‘Claim for the 80% of the employee’s salary, as of 28 February 2020, before tax’. This now says ‘Claim for the 80% of the employee’s salary, as in their last pay period prior to 19 March 2020.  If, based on previous guidance, you have calculated your claim based on the employee’s salary as at 28 February 2020 (and this differs from their salary in their last pay period prior to 19 March 2020) you can choose to still use this calculation for your first claim’
Final Thoughts

I still believe that employers and professional representative bodies ought to be holding the UK Government to account on Mr Sunak’s statement that included the line:

I am placing no limit on the amount of funding available for the scheme. We will pay grants to support as many jobs as necessary.

We need to be looking at employees that STARTED employment on or before 19 March 2020.  Not just employees that were paid on or before 19 March 2020 and the employer had submitted the FPS.  After all, there cannot be many new employees or employers that STARTED after 19 March 2020.

I agree that there must be a compliance regime and suspect that there will be some employers that may abuse the system (as every system in the UK is abused by some people).  However, the CJRS needs to be abiding by the basic intentions to:

  • Retain employees
  • Furlough them and pay them, then
  • Reclaim from HMRC

We cannot build a compliance regime around a process that HMRC are capable of policing.  Surely, it is just as easy to look at the start date as it is the date of FPS submission

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