23 April 2020
The Coronavirus Job Retention Scheme (“CJRS”) online portal opened on Monday 21 April 2020.
Statistics from the first full day of operation confirm –
- 185,000 firms submitted claims
- 1,300,000 were employees reported as furloughed
- Total value of £1.5bn
Many more employers will be submitting claims over the coming days and weeks.
Meanwhile figures published by the British Chambers of Commerce this week show that 7 out of 10 firms have furloughed some staff, with nearly 1 in 3 having furloughed 75%-100% of their workforce.
For those firms who have submitted claims already, attention is now focussed on whether payment will be made by HMRC within 6 working days of making an application, which is the time frame to which HMRC have committed.
However, behind the scenes there has been concern by some employers about what wording should be included in their furlough documentation with staff.
The Treasury's Direction to HMRC issued on Wednesday 15 April, which is the legislative source of HMRC's power to make payments under the CJRS says, amongst other things, the employer can reclaim the employee's salary:
"...if the employer and employee have agreed in writing (our emphasis) (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment."
But, what if your furlough documentation doesn’t include the employee’s written agreement to cease all work?
The versions of the HMRC Guidance which pre-dated the Treasury Direction required the employer to notify the employee in writing that they had to stop work, but did not require the employee to provide written agreement. There was also a requirement that the employer keep a copy of that written notification for five years, but again they said nothing about written agreement.
Then, a further version of the HMRC Guidance was issued on Monday 20 April, after the Treasury Direction. It says:-
“To be eligible for the grant employers must confirm in writing to their employee that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response (our emphasis). A record of this communication must be kept for five years.”
Now technically, the Treasury Direction takes precedence over the HMRC Guidance.
But, given that further HRMC Guidance was issued after the Treasury Direction (and in response to concerns raised by employers) it would make HMRC’s position very difficult if it now or subsequently asked for evidence of a written response by the employee.
Certainly, at the point of submitting claims through the portal, there is no requirement to provide evidence of the employee’s written agreement.
Some employers have been contacting employees and asking them to sign additional furlough documentation to demonstrate written agreement by the employee. Thankfully, that does not now appear to be necessary in light of the updated HRMC Guidance issued on 20 April.
If you would like us to review furlough documentation already put in place with your staff or provide advice on new furlough arrangements please get in touch.
This update contains general information only and does not constitute legal or other professional advice.
Caroline Carr, Partner: E: firstname.lastname@example.org / T: 0141 225 5263
Laura Salmond, Partner: E: email@example.com / T: 0141 225 5313
Jacqueline McCluskey, Partner: E: firstname.lastname@example.org / T: 0131 222 2936
Douglas Strang, Senior Associate: E: email@example.com / T: 0141 225 5271