HM Insights

Coronavirus: Updated Treasury Directions for Coronavirus Job Retention Scheme

Correct as of 26th May 2020

Just one month after it was announced by the Chancellor, the Coronavirus Job Retention Scheme (the Scheme) is now live and operational. We have provided various updates including when the scheme was first announced, when further guidance was issued on 26 March 2020, on 6 April 2020, on 8 April 2020 as further details were announced, on 9 April 2020,  on 15 April 2020 as the scheme expanded in scope, when the scheme went live on 20 April 2020 and when the scheme was extended until the end of October.

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The new Treasury Directions reflects what was previously announced by the Chancellor on 17 April when the scheme was extended to June, so it would be expected that a further Treasury Direction will be issued to take account of the further extension of the Scheme and the potential changes to its operation effective from August.

Key Amendments from new Treasury Direction

Whilst, as noted above, further changes are expected to the Scheme and the Treasury Directions in the coming weeks there are a number of key amendments in the updated Treasury Directions which employers will need to be aware of. These are:

  1. The removal of an explicit requirement for a written agreement to furlough employees. This change brings the Treasury Direction in line with the HMRC Guidance as previously the two conflicted on this point.
  2. More specific direction on the types of training employees can do whilst furloughed. The study or training can be to improve:

(i) an employee’s effectiveness in the employer’s business, or

(ii) the performance of the employer’s business,

However the study or training must not directly:

i. provide a service to the employer or the business activities of the employer,

ii. contribute to the business activities of the employer or anything generating income or profit for the employer,

iii. contribute to any significant degree in the production of goods the employer intends to supply to another person, or

iv. contribute in the making to any person of a supply of services for a consideration by the employer.

3. There is now explicit confirmation that pension scheme trustees can continue to work to fulfil their duties in that role.

4. Clarification that where SSP is “in payment”/ “due to be paid” (amending the earlier wording of it being “payable”), furlough can’t begin until after the end of the period of incapacity for work. This was unclear previously from review of both the guidance and the Treasury Direction. There is a suggestion that an employer and employee can agree to end a period of incapacity for work but no detail is provided as to how this might take effect.

5. Further detail is provided on how the Scheme will apply to those on unpaid leave, particularly periods of unpaid leave which started prior to the announcement of the Scheme.

6. There are amendments to the definition of pay, & examples of non-discretionary elements that will count as regular pay for the purposes of the Scheme. The following are given as examples of non-discretionary elements that should be included as regular pay:

(i) the payment is in respect of overtime, fees, commissions or a piece rate,

(ii) the payment is made in recognition of the employee undertaking additional or exceptional responsibilities, or

(iii) the payment is made in recognition of the circumstances in which the employee undertakes the employee’s duties or time when they are undertaken.

Get in touch

If you've any queries about this, or any other employment related matter that could affect your business, our team of specialist employment lawyers can assist. Please contact us on 0131 247 2534 to discuss further.

Useful links

CORONAVIRUS LEGAL ADVICE

EMPLOYMENT LAW FOR EMPLOYEES

EMPLOYMENT LAW FOR EMPLOYERS