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Coronavirus job retention scheme update

Posted on 16 April 2020

In the latest news on the Coronavirus job retention scheme, the Government has updated its guidance for employers and has published new detailed rules about how the scheme will operate in practice.

The biggest change to the previous guidance is to the main reference date. Previously, 28 February 2020 was the date used throughout the guidance for determining eligibility. In response to growing pressure as a result of the unfairness the arbitrary deadline had on employees who had started a new job after 28 February 2020 but before the scheme was announced, the reference date has now been pushed back to 19 March 2020. As a result, any employee who was on payroll on or before 19 March 2020 (and this had been notified to HMRC on or before that date) can now be furloughed. Employers would be well advised to revisit their approach as they may now be able to furlough employees who were not previously eligible and recover a proportion of their wages under the scheme.

The newly published detailed rules come in the form of a "Direction" from the Treasury, which is made in accordance with powers conferred on it by the Coronavirus Act 2020. The Treasury Direction can be found here. The Direction contains the rules which will govern the operation of the scheme.

There does appear to be some contradiction between the updated guidance and the new Treasury Direction, which is likely to cause great concern amongst employers who are trying to finalise details of their application. Employers will also be disappointed that the question of how holiday fits into the furlough picture – whether employers can require employees to take holiday, and what employees are entitled to be paid whilst on holiday – remains unanswered in both the updated guidance and the Treasury Direction.

There is diminishing hope that further amendments will be forthcoming to provide the much needed clarity, given that the portal is scheduled to open for applications on 20 April 2020 with payments set to be paid by the end of the month. This leaves very little time for any further clarification.

See our FAQs for employers for further details of the scheme and other common employment issues affecting employers at the current time.

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