In light of the new guidance, together with the government consultation on "clawback", employers must carefully consider what ongoing support they claim from the CJRS before it finally closes on 31 October 2020. There is a difficult balance to strike between managing workforce costs and ensuring there is a ready-to-go workforce as and when demand picks up.
1. Take stock on CJRS support
Employers should use this opportunity to review any CJRS support they have received to date and what continued support they may need and can access going forward. With the government consulting on an onerous clawback regime and some businesses finding that they have in fact weathered the Covid-19 emergency better than they anticipated, the media is reporting on a number of businesses now looking to return grants to HMRC under its new repayment process. With employer reputation a key component of any business bounceback, employers should not underestimate the media interest in the circumstances of businesses accessing CJRS funds. Over the next few years, it is likely HMRC will become aggressive in the action it will take in order to restore public finances.
Employers who have accessed funds should now check that they have kept appropriate evidence of the rationale for and circumstances in which they claimed CJRS funds, that the rationale still applies and that they ensure that they have complied with the record keeping requirements. Where they are concerned that in fact they may not have needed the CJRS funds or have incorrectly made any claims, advice should be sought.
2. Identify what continued support is required from the CJRS
For many businesses the CJRS has been a much needed lifeline. However, with lockdown easing and more premises opening for business, employers may need to re-evaluate what continued support they require. The new guidance on the CJRS for periods from 1 July 2020 fleshes out the detail of the government's previous announcement.
Only employers who have previously accessed the CJRS are eligible. For these employers, from 1 July 2020, there are also the following significant changes:
- With limited exceptions (for example, where an employee is returning from a period of maternity or other statutory parental leave), only employees who have previously been "successfully" furloughed under the CJRS for a minimum three-week period up to 1 July 2020 are eligible for a grant.
- With employers required to contribute to the wage and other costs for all furloughed staff from 1 August on an increasing basis, these costs will need to be factored in and may impact on any previous agreement to 'top up' wage costs for furloughed hours.
- Eligible employees may be brought back into the business part-time from 1 July (and subject to completing any minimum three-week period of furlough which commenced prior to 1 July) while furloughing them for the hours in which they are not instructed to work – at present there is a total prohibition on work during furlough. However, while the guidance is clear that there are no restrictions on working patterns, employers considering this option should note that:
- they will be fully liable for employment costs for the hours worked;
- as currently drafted, an employee's written agreement must be obtained (not just recorded in writing);
- record keeping processes will need to be put in place to capture hours worked and furloughed hours – care will need to be taken to ensure no work is undertaken in furloughed hours;
- the rules on calculating what can be claimed for furloughed hours and submitting it to HMRC are complex; and
- they will need to consider how this mix of working and being on furlough fits with pensions, death-in-service and other benefits (and underlying insurance policies) – review the arrangements made when the employees were put onto furlough.
- Employers may continue to keep eligible employees on "full-time" furlough. Employers must check existing agreements will cover any extended period.
- Any selection between employees who will return to the business full or part-time and who will remain on full-time furlough must be made in accordance with employment and discrimination laws. As always, communication will be critical.
- Any claim after 1 July cannot exceed the maximum number of employees made in any one claim prior to 1 July, although, again, there are exceptions, for example to cater for employees who transfer to a new employer under TUPE.
- There are new rules around the process for making a claim, which include that any claim must only cover days within one calendar month and, in general, must last at least seven days. Further, only one claim can be made in respect of any period: it must cover all fully furloughed and flexibly furloughed staff. Making this work will require careful planning. Any claim for the period up to 30 June 2020 must be made by 31 July 2020.
Where a decision is made that continued support from the CJRS is required, ensure continued compliance with the record-keeping obligations – the new guidance now requires records are kept for six years – and appropriate controls are imposed on the business (for example, that employees are not being required to work during furlough hours).
3. Keep under review your strategy for managing workforce costs
With scrutiny starting to fall on the use of CJRS funds and the rules on claiming under the CJRS changing from 1 July (with significant added complexities for those looking for employees to return part-time), employers should continue to consider other alternatives for managing workforce costs where possible.
With many employers having already agreed reduced pay and working hours for those employees who have not been furloughed, it may be that previously furloughed employees can be brought back into the workplace on a similar basis. Other options including encouraging employees to take sabbaticals, career breaks and reviewing any discretionary benefits such as bonuses.
It is widely recognised however that redundancies in many businesses will be inevitable. Strict legal obligations apply, which may include collective as well as individual consultation once proposals exist. Employers should understand the timetable around these procedural requirements and put in place preparations, such as identifying with whom any collective consultation would take place and ensuring that the technology is in place to carry out consultation remotely, so far as possible.
A failure to comply with the legal obligations when making redundancies brings potentially significant financial claims, as well as the inevitable damage to employer brand. Restructurings may also give rise to legal obligations under TUPE.
The new guidance again fails to address head on whether or not CJRS funds can be used during redundancy consultation or to pay an employee's notice period; employers should take legal advice before using CJRS funds in tandem with these processes, particularly in light of the clawback provisions.