New Treasury Direction issued
On 20 May 2020, the government issued a new Treasury Direction which modifies the effect of the earlier Treasury Direction (dated 15 April 2020 and which we updated you on here) on the Coronavirus Job Retention Scheme (“CJRS”).
The new Direction extends the CJRS to 30 June 2020 but does not cover the extension of the scheme to October 2020 nor the changes that are due to take effect in August 2020. We are expecting further detail on those issues by the end of this month.
What does the Direction cover?
The key areas covered by the new Direction are summarised below:
1. New wording clarifies the form of agreement required to place an employee on furlough. The requirement in the original Direction that an agreement must be in writing has been removed. Instead, the new Direction specifies:
- that the requirement to cease all work whilst on furlough can be agreed by means of a collective agreement between the employer and a trade union;
- that the agreement between employer and employee must specify “the main terms and conditions upon which the employee will cease all work in relation to their employment”;
- that this agreement should be incorporated (expressly or impliedly) into the employee’s contract; and
- that this agreement should be made in writing “or confirmed in writing” by the employer.
The employer should retain the agreement or confirmation until at least 30 June 2025.
2. A new paragraph sets out detailed guidance on the type of study and training that an employee can do while on furlough without breaching the requirement that a furloughed employee should not do any work for the employer.
3. In relation to statutory sick pay (“SSP”), amended wording now provides that, where SSP is in payment or due to be paid, furlough cannot begin until immediately after the end of the “period of incapacity for work” for which the SSP is being paid or due to be paid. It goes on to suggest that the timing of the end of the period of incapacity should be determined by agreement between the employer and employee.
4. Amended wording sets out further detail of how the CJRS applies to employees on unpaid leave. Importantly, no claim can be made under the CJRS for a period of unpaid leave falling between 1 March 2020 and 30 June 2020 and furlough cannot begin during that period.
5. There are new detailed definitions relating to the definition of “regular” salary or wages for the purposes of making a claim under the CJRS.
6. The new Direction clarifies that:
- a director will not be treated as doing work (and therefore fall outside of the CJRS) where he/she simply making a CJRS claim for or paying wages to, an employee of the company; and
- the carrying out of duties as a trustee or manager of an occupational pension scheme is also permitted (except where the employer’s business is the provision of occupational pension scheme independent trustee services).
7. There are amendments to the rules relating to the interaction of the CJRS with TUPE transfers. These include clarification that, in line with current government guidance, the relevant date for a transferee to be able to claim under the CJRS for transferred employees is 28 February 2020.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: email@example.com