The guidance on the JRS was updated on 4 April 2020, to confirm that certain workers were included within the scheme. These now include:
- Foreign nationals;
- officeholders and directors;
- salaried members of an LLP;
- agency and umbrella company workers; and
- Limb (b) workers.
In the case of directors, the company‘s board of directors has to confirm in writing that the director may be furloughed and keep this as a record with the company books. As previously indicated, the director is not able to provide services or generate income for the business and his or her activities is limited only to statutory obligations under the Companies Act.
The provision for salaried members of an LLP only apply to those members who are charged to PAYE under section 863A ITTOIA 2005. It is noted that the LLP agreement may need to be revised so that no work can be done by the salaried member. The furloughed amount is in respect of normal profit allocation only and cannot take into account any performance related profit share.
The guidance also confirms that contingent workers, who are generally those that work via a PSC to the public sector under the offpayroll worker rules (IR35), will also qualify for furloughed pay.
Whilst overtime is finally mentioned in the updated guidance, its application to the scheme is still not clear. You are able to claim for regular payments you are obliged to pay your employees, which can include wages, past overtime, fees and compulsory commission. Discretionary payments are excluded. Whether past overtime includes all overtime worked when looking at average pay for the last 12 months or not, remains to be clarified. A prudent approach is therefore recommended, or at most, to include regular overtime amounts only, rather than sporadic. Otherwise, employers run the risk of not receiving a full reimbursement.
All agreements to be furloughed need to be in writing and kept for a minimum of five years. The grant payment date starts from the start of the furlough period and not from when the agreement to be furloughed was reached.
It has been confirmed that no benefit in kind amounts are covered by the grant scheme and where any salary sacrifice arrangement has been entered into, the reference pay cannot take into account the sacrificed amounts, therefore meaning that the calculation is based on the revised pay, net of the salary sacrifice.
For trainees, it was previously noted that any online training carried out had to be paid at at least the NMW rate. It has now been confirmed that all training required by the employer should be paid at the NMW rate. Apprentices can continue to train but, as per the above, must be paid at at least the NMW rate for doing so. Therefore, if the grant amount is less than the NMW amount based on the usual salary, the employer will have to make up the shortfall.
In terms of qualifying to make a claim, employees are now told that they need to be enrolled for PAYE online, and this can take anything up to 10 days to register. Any online application should therefore be made as soon as possible.
New jobs and fixed contracts
It’s good news for employees in that the government have confirmed that furloughed employees are able to take up a new job during their furlough period, but this is only if their current employment contracts permit. Therefore, if this is prohibited by their current contracts, they will need to seek their employer’s approval.
Finally, fixed term contract employees may now be furloughed and their contracts can either be renewed or extended during the furlough period, without breaching the furlough terms. However, if the contract does expire during the furlough period, any additional furloughed payments cannot be claimed. It is also assumed that the minimum period left on the contract would be at least three weeks during the furlough period, under normal scheme provisions.