The Chancellor has today announced the Coronavirus Job Retention Scheme (CJRS), under which all employers can apply to HMRC for a grant to pay 80% of the wages of retained staff who are not working (known as “furlough”) up to a maximum of £2,500 per worker per month.

The CJRS will be backdated to 1st March 2020 and will remain in place until at least the end of May 2020. It is likely that payments will be made by the end of April. Government guidance just released states:

“You will need to:

  • designate affected employees as ‘furloughed workers’, and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation;
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)”

Further Clarification Required

There are many unanswered questions, such as: What is meant by staff who are not working – or furloughed? What is the position of an employee who is laid off but is asked to do the odd few hours work from home by their employer? Can the employer claim under CJRS for them? If the employer furloughs them under the scheme can they work for another employer and does this invalidate payment under the CJRS. What about staff that work part time for two employers – one who furloughs them and one who doesn’t?

Where pay is variable, on what basis will HMRC assess how much they are entitled to under the CJRS? The usual calculation for a week’s pay is based on the average of the last 12 weeks but the Chancellor did not answer this point clearly when questioned in the context of zero-hours workers.

Is there a qualifying period of service before an employee falls within the CJRS or could someone have been taken on today and still qualify? It is easy to see that there is huge scope for abuse and that the HMRC will not have the wherewithal to investigate these abuses in the foreseeable future.

As yet it is unclear whether the employer has to physically pay the employee in order to claim the grant and if so, do they have to deduct tax and national insurance in the usual way? Hopefully, more will be revealed in the coming days about the precise mechanics of the scheme.

Other announcements included:-
– Universal credit and working time basic credit is to be increased by £1000 per year
– Self-employed workers will be able to access universal credit at a rate equivalent to SSP for employees
– The self-assessment payments due this coming July will be deferred (but not waived) Until January 2021
– The next quarter of VAT payments will be deferred (but not waived) until the end of June.
– The Government-backed loans announced on 17 March will now remain interest-free for 12 months
rather than 6.

These are extraordinary times but as ever the devil will be in the detail. We will report more fully as soon as that detail is known.

Content shared in conjunction with Gaby Hardwicke.