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Job Retention Scheme

Coronavirus Job Retention Scheme – Update 15/04/20

Coronavirus Job Retention Scheme – The latest update as at 15 April 2020

The Coronavirus Act 2020 conferred powers on the Treasury to issue directions to HMRC containing authority and instructions for making payments under the Coronavirus Job Retention Scheme (Furlough Leave).

The Treasury has now done that and you can read the Direction in full here:

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

Significantly, some parts of the Direction are different to the guidance that is available on the Government’s website.  Although amendments are possible, it is likely that this Direction will be the definitive guidance on how the scheme works.

Main Points

The main points to be noted in the Direction are as follows:

  • Employers can claim in respect of employees who were employed on 19 March 2020 and in respect of whom the employer has submitted Real Time Information payroll data to HMRC.
  • The Scheme applies to any employee who is furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease“.  It is, therefore, not limited to those employees who would otherwise be made redundant.
  • A director who is furloughed can still undertake directors’ duties.  But, ‘directors’ duties’ has been given a very narrow definition and only includes work to fulfil a duty or other obligation arising from an Act of Parliament relating to the filing of the company’s accounts or provision of other information relating to the administration of the director’s company.
  • For an employer to claim in respect of an employee, that employee must have been instructed to cease all work for their employer.  The Direction says that this is the case: “only if the employer and employee have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment.” This is a major change as the guidance only requires the employer to notify the employee in writing and keep hold of that notification.  This could mean that many of the employees who have already been furloughed may not fall within the scheme.
  • When calculating the employee’s reference salary, which the employer will be able to claim 80% of, the employer cannot include any performance related bonus or discretionary payments (including tips), any conditional payments (e.g. where a threshold must be met) and any non-financial benefits.  The salary for the employee must disregard anything which is not “regular salary or wages”.

In addition to the above points, the Direction is completely silent on annual leave and whether it can be taken during the furlough period.


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