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Updated Treasury Direction - Clarity on the Coronavirus Job Retention Scheme

on Friday, 29 May 2020.

The Government has issued a new Treasury Direction which clarifies some of the detail of its Coronavirus Job Retention Scheme (the 'Scheme').

The update irons out some of the inconsistencies between the first Treasury Direction and HMRC's guidance, but does not confirm how the Scheme will continue to operate beyond 30 June 2020.

Key Changes

The new Treasury Direction makes the following changes to the Scheme:

  • Employee's written agreement no longer required - the explicit requirement for employer and employee to agree in writing to a period of furlough leave is removed. It is important to understand that an agreement must still be reached, but it can now be confirmed in writing by the employer alone. This may help simplify administrative processes for employers, but care should still be taken to evidence the agreement reached between the parties, details of which must be kept until at least 30 June 2025.

    It is also worth noting ACAS still recommends putting in place a written furlough agreement. However, the ACAS guidance has not been updated since the new Treasury Direction was published so this may yet change.

  • Collective agreements - the agreement to furlough can be reached via collective agreement between employer and trade union. The same evidential requirements apply in cases where agreement is reached through collective agreement.

  • SSP and furlough - the new Treasury Direction has been brought in line with the HMRC guidance. It confirms employers and employees can agree to end a period of incapacity for work for SSP purposes, in order to stop SSP and commence furlough leave instead.

    Coronavirus Legal Advice

  • Unpaid leave and furlough - an employee cannot be on unpaid leave and furloughed at the same time. If an employee went on unpaid leave before 1 March 2020, they cannot be furloughed until the agreed period of unpaid leave expires. This is unless an agreement was reached to vary the end date of the unpaid leave after the leave began, and before 20 March 2020.

  • Payments covered as regular wages and salary - non-discretionary variable payments such as fees, commission and overtime can be claimed only if they arise from a legally enforceable agreement.

  • Furloughed company directors - more detail is provided on the duties company directors can perform whilst furloughed. Permitted duties include fulfilling statutory duties such as filing accounts, making claims under the Scheme and paying staff salary/wages.

  • Pension scheme trustees - pension scheme trustees can fulfil their duties whilst furloughed, without this counting as work.

What Doesn't the New Treasury Direction Do?

The new Treasury Direction does not address the way the Scheme will run when it is extended to 31 October 2020. We know from the Chancellor's announcement, and also from the latest HMRC guidance that the Scheme will run, with some changes in place, from 1 August 2020. The Government has said employers will have more power to bring furloughed staff back to work on a part-time basis from 1 August, and also that employers will be asked to contribute to the cost of the Scheme from the same date. The detail of how the amended Scheme will operate is yet to be confirmed, but the Government has promised an update before the end of May so further detail is expected imminently.

If you require specialist legal advice in relation to the Coronavirus Job Retention Scheme, please contact Jessica Scott-Dye in our Employment Law team on 07799 901428, or complete the form below.

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