UK Covid-19: new Treasury Direction on Coronavirus Job Retention Scheme from 1 July 2020

The Government has today published a further Treasury Direction dated 25 June 2020 setting out the legal framework for claims under the Coronavirus Job Retention Scheme (CJRS) in respect of periods from 1 July 2020.  This gives effect to the Guidance amended on 13 June to cover "flexible furlough" (summarised here).  From 1 July 2020, employers will be able to claim in respect of employees who have been furloughed fully or partially (for any amount of time and work pattern) under the terms of the new Direction, provided that:

1. they have previously made a claim under the original, pre-July CJRS for the relevant employees for a consecutive 3 week period of furlough completed within the period 1 March to 30 June (subject to exemptions for individuals in certain circumstances), and
2. the number of employees who can be claimed for cannot exceed the maximum number in any one claim made for furlough periods prior to 1 July, called the "high-watermark number" (save that individuals exempt from the first condition can be added on to this number).

The 13 June Guidance exempted from the first condition any individuals returning from maternity, shared parental, adoption, paternity or parental bereavement leave, who were on payroll on or before 19 March 2020 and on leave before 10 June 2020, provided the employer met the condition for other employees.  An amendment to the Guidance on 19 June added military reservists, returning from mobilisation after 10 June 2020, to the exemption on the same basis.  The employer's "high-watermark number" cap on future furlough numbers is increased by the number of any such "returning employees" (but there is no requirement to actually furlough these individuals).  Provisions to this effect are now included in the new Direction.

There are similar provisions where a TUPE transfer takes place after 10 June 2020, in relation to transferring employees who were furloughed by the transferor under the original CJRS (but who cannot satisfy the first condition as regards the transferee).  The Direction confirms that the number of these previously-furloughed, transferring employees is added to the transferee’s "high-watermark number" cap in the same way as "returning employees". (The Direction does not appear to give any effect to the ambiguous comment in the Guidance that "this is subject to the maximum cap the previous employer was subject to".  This could have meant that if, say, 40 of the transferring employees had at some time been furloughed, but at different times so that the maximum number of these employees included by the transferor in one single claim was 30, only 30 would be added to the transferee's "high-watermark" cap, or alternatively that the transferor's own "high-watermark" number in respect of its entire workforce (including those not transferring) was to be added to the transferee's cap.  Hopefully the Guidance will now be amended to remove this comment.)

The Direction replicates most of the provisions of the earlier Directions governing the pre-July CJRS, including those on the calculation of reference salary and the requirement not to work during furloughed hours.  A large part of the new Direction details complex calculations required to work out "usual hours" and "furloughed hours" in relation to claims for partial furlough.  Although employers are likely to find the Guidance on this slightly more user-friendly than the Direction, it would come as no surprise if the complexity persuaded some employers to continue fully furloughing employees on a rota basis rather than switch to partial furlough.  The new Direction also provides for the tapering of the financial support available to employers from August through to the end of October, as previously announced.

A key point concerns the arrangements that must be made to agree furlough under the new Direction. The drafting of the amended Guidance was unclear as to whether, to be eligible to claim for partial furlough, a written agreement with the employee was required, whereas an oral agreement confirmed in writing by the employer was acceptable for full furlough claims without any need for a written response from the employee.  The Direction now makes clear that there is no such distinction - to be eligible to claim for either full or partial furlough, an oral agreement can be reached with the employee and then confirmed in writing (which can include email) by the employer.  Employers should note that there is a new express requirement that the agreement must have been made (but not necessarily confirmed) before the beginning of the claim period - retrospective agreements will not be sufficient.  However, the Direction confirms that an agreement can subsequently be varied to reflect any variation agreed during the period to which the claim relates. Again, it would be helpful if the Guidance were amended to conform.

We will be publishing an updated version of our client briefing on the CJRS shortly.

In other recent developments :

• HMRC has published a new web page on how employers can pay all or some of the CJRS grant back if it has been overclaimed;
• guidance on the taxation of expenses where employees work from home due to coronavirus has been published here;
• relaxations to lockdown announced from 4 July are summarised here and updated working safely guides for employers, including for those in business sectors permitted to reopen from 4 July, can be found here;
• the Prime Minister has announced plans to "pause" the shielding programme for the clinically extremely vulnerable in England on 31 July 2020 unless there is a "significant rise in cases" in the meantime.  This is likely to mean that shielding employees will not be entitled to statutory sick pay if continuing to shield from 1 August. The press release states that "the government is asking employers to ease the transition for their clinically extremely vulnerable employees, ensuring that robust measures are put in place for those currently shielding to return to work when they are able to do so.  For anyone concerned about returning to work once the guidance has eased, we recommend they speak with their employer to understand their specific policies in relation to COVID-19. We advise they discuss their situation, agree a plan for returning to work and adjustments that may be needed before they return."
• the Information Commissioner's Office has published further guidance on data protection covering issues such as mandatory workplace testing and what information should be provided to employees about results from a commissioned testing service.  The ICO has also produced advice on issues around home working.