Treasury irons out finer details of COVID-19 furlough scheme

The finer details of how the Coronavirus Job Retention Scheme will work are being ironed out – albeit not quite as fast as ContractorUK readers are submitting questions about it.

Perhaps most helpfully for limited company directors, the Treasury has confirmed that such directors who owner-manage an incorporated business can furlough themselves under CJRS.

“[Such a status and position] does not disqualify them from being furloughed so long as they are on PAYE, payroll,” Ben Kerry, head of labour markets at HMT said in a CBI webinar.

“They will have some statutory duties and obligations such as filling out their accounts, but they are still allowed to undertake their statutory duties while they are being furloughed.

“So that would not count as doing work…[which is key because] one of the key conditions of the furlough scheme is that the employee is not allowed to work for the employer.”

'PSC bosses to be furloughed as employees, not directors'

But ReLegal Consulting is cautious, because it noticed the government has revised its wording, saying PSCs “may” be able to get JRS support, from PSCs ‘could’ get the support.

Nonetheless, the firm now echoes HMT’s stance, saying: “A director’s role as an officeholder is separate and distinct to the role as an employee, even if the individual fulfils both roles.

“So if the individual is an employee of their limited company, then they would be furloughed as an employee, not a director.”

'Furloughed staff of one employer, can still work for a second'

While the scheme is seen as restrictive for PSCs (it covers only the salary, not dividends of those on PAYE from Feb 28), it appears to offer options to agency or umbrella workers.

“Employees are not permitted to provide any work for their employer, including providing services or generating revenue,” began Fieldfisher in a bulletin sent to ContractorUK.

“However, employees placed on furlough by one employer can provide work for a different employer if they choose and subject to the terms of their employment contracts.”

'Workers can complete training during the furlough'

Similarly, despite the condition of not working during the furlough, “employees may volunteer or complete training while furloughed,” the law firm says.

Further interpreting the official CJRS guidance, the firm’s employment head Ranjit Dhindsa says individuals on agency PAYE should be furloughed by the agency, not the end-client.

This question of who provides the furlough has been answered differently by Money Saving Expert’s Martin Lewis, who took to Twitter with advice for umbrella and agency users.

'Push that company'

“The problem is, I know many agencies and many umbrella workers and many freelance workers are….[asking] ‘Well ,who do I ask?’

“Well, if you’re a freelancer who worked for lots of different people in February, go to all of them -- they can all furlough you based on that."

In a v-log, Lewis added: “If you work for one firm, it’s who you worked for in February that counts. If you’re an agency worker or in an umbrella company, push that company, it can furlough you.”

'HMRC working through the night'

However HMRC is still “working through the night to get the portal” for claims under the CJRS “up and running,” said HMT’s Mr Kerry, speaking on Friday.

His expectation is that the HMRC portal (which will be for employers to use given that the scheme is a reimbursement between state and employer), will be live by “mid-to-late April.”

Mr Kerry added: “The key thing is having a PAYE reference number because what’s critical is that the only employees eligible for the scheme are individuals on PAYE, so you need to have that reference number.

“And then you also should have the number of employees being furloughed; the claimed periods; the amount claimed and bank account and sort code details for a UK bank account ; contact name and phone number.”

'Back on board after the first three-week furlough'

Referring to the same new guidance which the Treasury official urged would-be claimants to read (which includes How To Apply), employment law firm Chartergates said employers were not going to be forced to retain workers after the furlough.

On the other hand, clarified Mr Kerry in the webinar, “you can furlough someone for three weeks and then you can bring them back on board.

“And then if you decide with that individual that they need to be furloughed again, then you can have another three-week period, so long as the scheme is continuing to run during that period.”

'Devil in the detail'

Another sympathetic move could be that if an otherwise eligible PAYE worker was made redundant before Feb 28th (eligibility begins on and after the date), the employer could rehire them to take advantage of the scheme, advised Mr Dhindsa.

But as to the scheme’s other criteria, the employment lawyer cautions that since HMRC will be auditing the scheme in due course, employers “should consider how they will ensure that employees do not continue to work and be able to demonstrate that they have not done so during furlough.”

He added: “The devil is in the detail and despite efforts to break it down, it still is quite complex so employers should seek advice to ensure they're making full use of all the support out there to secure their workforce.”

'Six-fold support for self-employed'

Meanwhile, asked before both the CJRS and the corresponding SEISS (Self-Employed Income Support Scheme) were unveiled about what support during the COVID-19 outbreak is available for people who run their own business, a spokesperson for HMRC sent a statement listing six measures:

  1. Extension of Statutory Sick Pay to self-isolaters and those in the same household caring for self-isolaters -- payable from day 1 not day 4.
  2. Contributory Employment and Support Allowance will be now be available from Day 1 not Day 8 for eligible people unable to work because they are directly affected by COVID-19 or self-isolating.
  3. Advances for all new Universal Credit claimants are now available online / via phone, with no requirement to attend a job centre.
  4. Earnings rules for self-employed UC claimants have already been temporarily relaxed for those who are sick or self-isolating.
  5. Mortgage lenders will offer mortgage holidays of three months
  6. Forbearance from lenders, where individuals are having difficulty paying back personal loans or credit.

'PSC bosses to get more info'

Speaking this morning to ContractorUK, the HMRC spokesman also said: "The CJRS is for anyone operating a PAYE scheme, so people in umbrella schemes, getting paid through PAYE, can be furloughed."

In line with an expert's recommendation today for contractors to keep a close eye on support materials, the Revenue spokesman added: "We should have some more guidance coming soon for company directors."

Editor's Note: The Coronavirus Job Retention Scheme was updated by the government on April 15, affecting the eligibility dates in this article. Read more about the CJRS here.


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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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