Intelligence Report 5: The Coronavirus Crisis: Updated Furlough Guidance dated 15th April, the HMRC Directions, Holidays, The Self Employed. Practical Examples.

The Government produced its Fourth  update of the Furlough Guidance on the 15th  April. The HMRC Directions were also produced.

In this Fifth Report we take into account the changes and set out the directions - The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction. We also consider the ACAS Guide on holiday. We use a practical example to consider issues thrown up by the Scheme.

 

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Intelligence Report 5: The Coronavirus Crisis: Updated Furlough Guidance dated 15th April, the HMRC Directions,  Holidays, The Self Employed. Practical Examples.

 

See also Duggan QC on Contracts of Employment (4th Edition).

 

BULLET POINTS 

Furloughed employees - the Fourth Guidance dated April 15th April 2020   

 

  • Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.

 

The Fourth Guidance deals with the new date of 19th March:

  • Individuals can furlough employees such as nannies provided they pay them through PAYE and sent HMRC an RTI submission notifying a payment in respect of the employee on or before 19 March 2020.

 

  • Claims for furloughed employees  can be made where the employee was on the 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. Employees that were employed as of 28 February 2020 and on payroll (i.e. notified to HMRC on an RTI submission on or before 28 February) and were made redundant or stopped working for the employer after that and prior to 19 March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.

 

  • If an employee went on unpaid leave on or before 28 February, you cannot furlough them until the date on which it was agreed they would return from leave.

 

  • If you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme. This applies to employees that were made redundant or stopped working for you after 28 February, even if you do not re-employ them until after 19 March. This applies as long as the employee was on your payroll as at 28 February and had been notified to HMRC on an RTI submission on or before 28 February 2020. This means an RTI submission notifying payment in respect of that employee to HMRC must have been made on or before 28 February 2020.

 

Sickness

  • Furloughed employees who become ill must be paid at least Statutory Sick Pay. It is up to employers to decide whether to move these employees onto Statutory Sick Pay or to keep them on furlough, at their furloughed rate.

 

  • If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.

 

Shielding Employees

  • Employees who are unable to work because they are shielding in line with public health guidance (or need to stay home with someone who is shielding) can be furloughed.

 

Date of calculation

  • 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.

 

Employees whose pay varies

  • If they have been employed for less than a month, work out a pro rata for their earnings so far, and claim for 80%.

 

Employer National Insurance and Pension Contributions

  • You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too. You cannot claim for:
  • additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
  • any pension contributions you make that are above the mandatory employer contribution

 

Payment

  • All the grant received to cover an employee’s subsidised furlough pay must be paid to them in the form of money. No part of the grant should be netted off to pay for the provision of benefits or a salary sacrifice scheme.

 

What you need to make a claim

  • your ePAYE reference number
  • the number of employees being furloughed
  • National Insurance Numbers for the furloughed employees. (added)
  • Names of the furloughed employees. (added)
  • Payroll/employee number for the furloughed employees (optional) (added)
  • your Self Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number (added)
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

 

  • If you have fewer than 100 furloughed staff you will be asked to enter details of each employee you are claiming for directly into the system - this will include their name, National Insurance number, claim period and claim amount, and payroll/employee number (optional).

 

  • If you have 100 or more furloughed staff you will be asked to upload a file with the information rather than input it directly into the system. We will accept the following file types: .xls .xlsx .csv .ods

 

  • The file should include the following information for each furloughed employee: name, National Insurance number, claim period and claim amount, payroll/employee number (optional).

 

  • You should retain all records and calculations in respect of your claims.
  • HMRC cannot provide your employees with details of claims you make on their behalf. Please help us by keeping your employees informed, answering any questions that they might have. Please ask them not to contact HMRC.

 

The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction

 

Purpose of Scheme

By Clause 2, the purpose of the Scheme is emphasised as s being only for reimbursement of costs incurred as a result of costs of employment of furloughed employee. A claim may not be made if it is abusive or otherwise contrary to the exceptional purpose of the scheme (2.5.).

The Directions are structured as follows:

  • Qualifying employer: 3.1. – 3.2.
  • More than on PAYE scheme – 4.
  • Qualifying costs: 5 and 7.1. to 7.15
  • Furloughed employees – 6 and 13.4.
  • Expenditure to be reimbursed: 8.1. – 8.12
  • Succession – new employer with no qualifying PAYE scheme: 9.
  • Succession – new employer with qualifying PAYE scheme: 10.
  • PAYE scheme reorganisations- 11.
  • Duration – 12.
  • Definitions – 13.
  • Other directions – 14.
  • HMRC accounts – 15.

 

Qualifying employers

By clause 3 in order to claim the employer must have a qualifying PAYE scheme and, by clause 4, can make claims in respect of each qualifying scheme.

 

3.1 An employer may make a claim for a payment under CJRS if the following condition is met.

3.2 The employer must have a pay as you earn (“PAYE”) scheme registered on HMRC’s real time information system for PAYE on 19 March 2020 (“a qualifying PAYE scheme”). 

 Employers with more than one PAYE scheme

  1. If an employer has more than one qualifying PAYE scheme-

(a) the employer must make a separate claim in relation to each scheme, and

(b) the amount of any payment under CJRS will be calculated separately in relation to each scheme.

 

Qualifying costs: 5 and 7.1. to 7.15

The conditions set out in clause 7 relate to qualifying costs. These cover

  • a payment to an employee during a period of furlough.
  • £2500 per month, or pro rata (7.1.(b)(i)), or 80% where the employee is paid less than £2500 per month (7.1.(b)(ii)).

 

Making good underpayments

By 7.11 where paragraph 7.12 applies, the sum of the original payment described in paragraph 7.12(a) and the further amount described in paragraph 7.12(c) must be treated as having been paid at the time of the payment of the original payment for the purposes of paragraph 7.1(b)(ii).   By 7.12 where-

(a)       in the period beginning on 1 March 2020 and ending on the third day after the making this direction an amount by way of wages or salary is paid in respect of a period of employment (“the original payment”) to an employee,

(b)       the original payment is less than the amount required by paragraph 7.1(b)(ii) for the purpose of claiming CJRS,

(c)        before making a CJRS claim in respect of the original payment the employer pays the employee a further amount (“the further amount”) in respect of the period of employment to which the original payment relates, and

(d)       the sum of the original payment and the further amount meets the requirements of paragraph 7.1(b)(ii).

 

Dates of calculation of 80% - treating  28th February as the date

 By 7.16 where paragraph 7.17 applies, a person making their first CJRS claim in respect of a fixed rate employee may make that claim as if paragraph 7.7 referred to 28 February 2020 in place of 19 March 2020.

 

By 7.17 where, in anticipation of making the first CJRS claim in respect of the employee mentioned in paragraph 7.16 and before the publication of this direction, the person determined the employee’s reference salary as if paragraph 7.7 referred to 28 February 2020.

 

Non fixed rate employee

Except for a fixed rate employee, the reference salary or an employee or person treated as an employee (LLPs under 13.3(a)) is the greater of the average monthly or daily salary  of pro rata amount paid for the tax year 2019-2020 before the furlough began and the actual amount paid to the employee in the corresponding calendar period in the previous year (7.2.)

  • By 13.3.(a), where a person is treated as an employee for the purpose of the Income Tax Acts as being employed by an LLP under a contract of service instead of being a member that person is treated as an employee under the CJRS.
  • No account is taken of anything that is not regular salary or wages (7.3.).
  • ‘Regular’ means so much of the amount of salary or wages as (a) cannot vary according to any matters in 7.5; (b) is not conditional on any matter; (c) is not a benefit or any other kind and (d) arises from a legally enforceable agreement, understanding scheme, transaction or series of transactions.
  • 5. provides that the ‘relevant matters’ are (a) the performance of or any part of any business of the employer or any business of a person connected with the employer; (b) the contribution made by the employee to the performance of, or any part of any business,   (c)  the performance by the employee of any duties of the employment, and  (d) any similar considerations or otherwise payable at the discretion of the employer or any other person (such as a gratuity).

 

Fixed rate employee:

A person is fixed rate employee if (7.6.):

 (a)      the person is an employee or treated as an employee for the purposes of CJRS by virtue of paragraph 13.3(a) (member of a limited liability partnership),

(b)       the person is entitled under their contract to be paid an annual salary,

(c)       the person is entitled under their contract to be paid that salary in respect of a number of hours in a year whether those hours are specified in or ascertained in accordance with their contract (“the basic hours”),

(d)       the person is not entitled under their contract to a payment in respect of the basic hours other than an annual salary,

(e)       the person is entitled under their contract to be paid, where practicable and regardless of the number of hours actually worked in a particular week or month in equal weekly, multiple of weeks or monthly instalments (“the salary period”), and

(f)        the basic hours worked in a salary period do not normally vary according to business, economic or agricultural seasonal considerations.

 

By 7.7. the reference salary of a fixed rate employee is the amount payable to the employee in the latest salary period ending on or before 19 March 2020 (but disregarding anything which is not regular salary or wages as described in paragraph 7.3).

 

 

By 7.8  in paragraph 7.6 “contract” means a legally enforceable agreement as described in paragraph 7.4(d). (ie. which arises from a legally enforceable agreement, understanding scheme, transaction or series of transactions).

 

Unpaid sabbatical or leave including social benefit leave

By 7.10,  in relation to a fixed rate employee, where a period by reference to which the reference salary is determinable (“reference salary period”) includes a period of unpaid sabbatical or unpaid leave (“unpaid period”), the reference salary must be determined on the basis of what would have been paid to the employee during the unpaid period if the sabbatical or leave had been granted on the same terms as the employee’s paid leave during the reference salary period taking account of the matters described in paragraphs 7.13 to 7.15 as are appropriate.  This clause is aimed at ensuring employees how have taken unpaid leave are still paid in accordance with the salary they would normally expect fi they were on holiday and being paid in full.

 

  • 13 The provision made by paragraph 7.10 applies in relation to a fixed rate employee who is a relevant employee as if the references to unpaid sabbatical and unpaid leave also include references to social benefit leave.
  • 14 A person is a relevant employee if (a) the person is employed by an employer, (b) the person has been granted a period of social benefit leave beginning before the period mentioned in paragraph 12 (duration of CJRS), (c) at the time when it began, it was expected or considered likely that the period of social benefit leave would end at a time falling during the period mentioned in paragraph 12, (d) the period of social benefit leave ended during the period mentioned in paragraph 12, and (e) the period of furlough in respect of the person began after the end of the period of social benefit leave.

 

By 7.15 for the purposes of paragraphs 7.13 and 7.14, social benefit leave means a period of time in respect of which any of the benefits specified in paragraph 8.7 is payable in respect of the person described in paragraph 7.14(a).  The benefits in 8.7. are

(a)       Statutory Sick Pay pursuant to section 151 of SSCBA or section 147 of SSCB(NI)A;

(b)       Statutory Maternity Pay pursuant to section 164 of SSCBA or section 160 of SSCB(NI)A;

(c)       Statutory Adoption Pay pursuant to section 171ZL of SSCBA or section 167ZL of SSCB(NI)A;

(d)       Statutory Paternity Pay pursuant to sections 171ZA and 171ZB of SSCBA or sections 167ZA and 167ZB of SSCB(NI)A;

(e)       Statutory Shared Parental Pay pursuant to sections 171ZU and 171ZV of SSCBA or sections 167ZU and 167 ZW of SSCB(NI)A;

(f)        Statutory Parental Bereavement Pay pursuant to section 171ZZ6 of SSCBA or any provision made for Northern Ireland which corresponds to that section.

 

Furloughed employees

The conditions for being a furloughed employee are set out in clause 6, and are that:

  • The employee has been instructed to cease all work.
  • The period is 21 calendar days or more.
  • The instruction is given as a result of coronavirus or coronavirus disease.

 

Connected employer

By clause 6.2. an employee will not have ceased work if working for a connected employer as defined in clause 13.4.

 

Clause 13.4. provides that for the purposes of determining whether a person, company or charity is connected with an employer for the purposes of CJRS-

(a)       whether a person is connected with an employer must be determined in accordance with section 993 of the Income Tax Act 2007;

(b)       without prejudice to paragraphs 13.4(a) and 13.4(c), whether a company is connected with an employer (where the employer is a company) must be determined in accordance with section 1122 of CTA;

(c)       without prejudice to paragraphs 13.4(a) and 13.4(b), whether a charity is connected with an employer (where the employer is a charity) must be determined in accordance with section 5 of SCDA construed as if-

(i)         references to a tax year in that section were omitted, and

(ii)        subsection (7) of that section were omitted.

 

Statutory sick pay

By clause 6.3. in  calculating the period of 21 days-  where SSP is payable that period is to be disregarded.

 

Unpaid Sabbatical or unpaid leave.

Clauses 6.4. and 6.5. make it clear that period of sabbatical or unpaid leave are to be disregarded where it has been agreed, the period was contemplated, or where its duration was uncertain but calculated by reference to particular circumstance, completion of a particular purpose or occurrence of a specified event, whether taken before 28th February or after 19th March.

 

Company director

Clause 6.6. specifies that work taken by a director to fulfil a duty or other obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company is to be disregarded. This appears tighter than the Guidance which refers to the director performing statutory duties.

 

The agreement must be in writing

By 6.7. the agreement to cease work must be in writing.

 

Reimbursement of Expenditure

Clause 8 sets out the sums that will be reimbursed to the employer. By clause 8.1. the payment may reimburse:

(a)       the gross amount of earnings paid or reasonably expected to be paid by the employer to an employee. By 8.2 the amount to be paid to reimburse the gross amount of earnings must (subject to paragraph 8.6) not exceed the lower of (a) £2,500 per month, and (b) the amount equal to 80% of the employee’s reference salary (see paragraphs 7.1 to 7.15).

(b)       any employer national insurance contributions liable to be paid by the employer arising from the payment of the gross amount. By 8.3 the amount to be paid to reimburse any employer national insurance contributions must not exceed the amount of employer’s contributions that would have been assessed on the amount of gross earnings being reimbursed under CJRS; and, by 8.4, the total amount to be paid to reimburse any employer national insurance contributions must not exceed the total amount of employer’s contributions actually paid by the employer for the period of the claim. By 8.5, for the purposes of CJRS, “employer national insurance contributions” are the secondary Class 1 contributions an employer is liable to pay as a secondary contributor in respect of an employee by virtue of sections 6 and 7 of the Social Security Contributions and Benefits Act 1992 (“SSCBA”) or sections 6 and 7 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (“SSCB(NI)A”).

 

(c)       the amount allowable as a CJRS claimable pension contribution. See Clauses 8.8. to 8.12. below.

 

It is clear that you first calculate the gross amount paid and then apply the 80%.

 

Pension contributions

By 8.8 a payment by an employer of a pension contribution in respect of an employee to a registered pension scheme is a CJRS claimable pension contribution if it is paid in respect of an amount of gross earnings as described in paragraph 8.1(a).  By 8.9, the amount allowable as a CJRS claimable pension contribution under paragraph 8.1(c) is the lower of-

(a)       the contribution payable by the employer in respect of the employee to the registered pension scheme for the relevant CJRS period, and

(b)       3% of the part of the gross earnings paid to an employee in a pay reference period as applicable to the employee of 12 months that are-

(i)        more than the lower limit for qualifying earnings in that pay reference period (as set out in section 13(1)(a) of the Pensions Act 2008), and 

(ii)       not more than the amount claimable by the employer under CJRS in respect of an amount of gross earnings as described in paragraph 8.1(a) in the same pay reference period.  

 

By clause 8.10 in the case of a pay reference period of less or more than 12 months, paragraph 8.9(b) applies as if the amounts described in that paragraph were proportionately less or more as appropriate.  By Clause 8.11, for the purposes of determining whether sub-paragraph (a) or sub-paragraph (b) is applicable in paragraph 8.9-

(a)       the same duration of relevant CJRS period and pay reference period shall be used to compare the lower of the amounts under sub-paragraphs 8.9(a) and 8.9(b),  

(b)       whichever sub-paragraph produces the lower of these two amounts shall be the relevant sub-paragraph for the purposes of determining the amount allowable to be paid as a CJRS claimable pension contribution under paragraph 8.1(c), and

(c)       the duration of the period used to compare sub-paragraphs 8.9(a) and 8.9(b) is not required to be identical to the period for determining the actual amount allowable that is to be paid under paragraph 8.1(c).

 

8.12 For the purposes of paragraphs 8.8 to 8.11-

(a)       “registered pension scheme” means a pension scheme for the purposes of Part 4 of the Finance Act 2004;

(b)       “pay reference period” has the meaning given in section 15 of the Pensions Act 2008 and regulations made thereunder;

(c)       “relevant CJRS period” means the period, part-period or periods over which the employer is required or accustomed to pay pension contributions in respect of the employee that fall within the period of the claim for a payment under CJRS.

 

Further definitions - Statutory benefits

By 8.6 no claim under CJRS may include amounts of specified benefits payable or liable to be payable in respect of an employee (whether or not a claim to the relevant specified benefit is actually made) during the employee’s period of furlough and the gross amount of earnings falling for reimbursement as described in paragraph 8.2 must be correspondingly reduced. These benefits are (8.7.):

(a)       Statutory Sick Pay pursuant to section 151 of SSCBA or section 147 of SSCB(NI)A;

(b)        Statutory Maternity Pay pursuant to section 164 of SSCBA or section 160 of SSCB(NI)A;

(c)       Statutory Adoption Pay pursuant to section 171ZL of SSCBA or section 167ZL of SSCB(NI)A;

(d)       Statutory Paternity Pay pursuant to sections 171ZA and 171ZB of SSCBA or sections 167ZA and 167ZB of SSCB(NI)A;

(e)       Statutory Shared Parental Pay pursuant to sections 171ZU and 171ZV of SSCBA or sections 167ZU and 167 ZW of SSCB(NI)A;

(f)       Statutory Parental Bereavement Pay pursuant to section 171ZZ6 of SSCBA or any provision made for Northern Ireland which corresponds to that section.

 

Succession to a business – new employer has no qualifying PAYE scheme

Clause 9 provides that a claim may be made by a new employer under a TUPE transfer where there is a change in employer after 19th March and the new employer sets up a scheme if, immediately before the change, the former employer’s PAYE scheme having effect in relation to the employee was a qualifying PAYE scheme.

 

Succession to a business – new employer already has a qualifying PAYE scheme

Clause 10 deems the new employer to have mad payments where the transferee already has a PAYE scheme.

 

PAYE scheme reorganisations

Clause 11 provides for circumstances in which there is a reorganisation to replace two PAYE schemes in consequence of a reorganisation of the employer’s business and the new scheme applies to employees who are former members of one of the transferred schemes before the new scheme has effect in relation to any other employee.

 

Duration of CJRS

By clause 12 the scheme covers the period March to May.

 

EARLIER BULLET POINTS

 

The Third Version of the Guidance contains the following clarifications:

  1. Most importantly, the Guidance applies to employees who were subject to a TUPE transfer after 28th February 2020.
  2. Employees can be switched from sick pay to furlough provided that this is not abused - it is not intended that furlough covers short terms  sickness - given that  a person must be furloughed for 3 weeks this is clear. However, the long term sick may be furloughed:
  3. "Short term illness/ self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees".
  4. Employers are also entitled to furlough employees who are being shielded or off on long-term sick leave. It is up to employers to decide whether to furlough these employees.
  5. Those on work visas may be furloughed as "Grants under the scheme are not counted as ‘access to public funds’,
  6. Employees may work for another employer whilst furloughed provided that the organisation is not linked to the employer.
  7. The entire grant must be paid to the employee without deduction.
  8. Where a group of companies have multiple PAYE schemes and there is a transfer of all employees from these schemes into a new consolidated PAYE scheme after 28 February 2020, the new scheme will be eligible to furlough those employees and claim the grants available under the CJRS.
  9. Employer National Insurance contributions that are paid on the subsidised furlough pay can be claimed
  10. Individuals with employees that are not employed as part of a business (such as nannies or other domestic staff) are not taxable on grants received under the scheme. Domestic staff are subject to Income Tax and National Insurance Contributions on their wages as normal. 
  11. HOLIDAY - ACAS has backtracked from its position that holiday cannot be instructed to be taken whilst an employee is on furlough.

 

The Second Guidance - points that arose

(1)          Apprentices

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed. However, you must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage. Guidance is available for changes in apprenticeship learning arrangements because of COVID-19.

 (2)         Administrators

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. However, we would expect an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business.

 (3)         If your employee is self-isolating or on sick leave

If you’re employee is on sick leave or self-isolating, they’ll be able to get Statutory Sick Pay. You cannot claim for employees while they’re getting Statutory Sick Pay, but they can be furloughed and claimed for once they are no longer receiving Statutory Sick Pay.

 (4)         Shielding Employees

You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.

(5)         Employees with caring responsibilities

Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.

(6)         Eligible individuals who are not employees

As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE: * office holders (including company directors) * salaried members of Limited Liability Partnerships (LLPs) * agency workers (including those employed by umbrella companies) * limb (b) workers

(7)        Office Holders

Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

 (8)         Company Directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned. Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

 (9)         Salaried Members of Limited Liability Partnerships (LLPs)

Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

  (10)         Agency Workers (including those employed by umbrella companies)

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies. Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme. Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020. Read more information on the Self-Employed Income Support Scheme, including eligibility criteria and how to claim.

 (11)        The normal rules for maternity and other forms of parental leave and pay apply. You can claim through the scheme for enhanced (earnings related) contractual pay for employees who qualify for either: maternity pay; adoption pay; paternity pay; shared parental pay

 (12)      Agreeing to furlough employees

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

 IMPORTANT - To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.

 You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

(13)      Past Overtime, Fees, Commission, Bonuses and non-cash payments

You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.

 We expressed concern that this was  likely to hugely disadvantage some employees, who receive a very small salary and whose earnings are primarily based on commission.  The Guidance makes it clear now that commission can be claimed provided that it was already earned before the 28th February 2020. It will be based upon the calculation set out in the next paragraph. Fees can also be claimed – the Guidance has changed the position.  Non monetary benefits such as a car or health insurance are not included.

(14)      Benefits in Kind and Salary Sacrifice Schemes

The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary.

(15)        Working for a different employer

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough. For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.

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