Friday last week saw the issue of the fourth Treasury Direction to HMRC concerning the administration of the CJRS. TD4 deals with the CJRS job retention bonus scheme, shamefully immortalised in the drafting as the CJRS(JR)B – what would have been so hard about “the Bonus”?
Five and a bit pages of circumlocution and sub-sub-sub-paragraphs set out the terms on which an employer can claim the £1,000 for any employee it had previously furloughed who is still on the books as at 31 January next year. The key points are these:
- The employee need not have remained on furlough, full or partial, up to 31 October but under rule 6.2 he does have to have been continuously employed from whenever he came off it to 31 January 2021.
- You have to paid him something in each CJRS(JR)B period, being basically each month from the end of the furlough scheme to 31 January next year, but slightly and pointlessly complicated by each CJRS month running from 6th of one to 5th of the next. The amount per month is not specified but it must be at least £1,560 over that three month period. This applies even if the employee is then on some sort of leave or other absence which would have reduced their pay from you to below that level or suspended it all together, such as maternity or parental leave, long-term illness or agreed unpaid absence. In those circumstances you will therefore have to shell out at least £1,560 to your employee for the privilege of receiving £1,000 back, an exchange few cash-strapped employers may find attractive.
- Rule 6.5 disentitles the employer from the £1,000 if the employee is under notice of termination as at 31 January. On the face of it, that would include notice given by the employee and so the £1,000 which the employer may well have banked upon in keeping that employee on the books can be denied to it at the last moment if he chooses to jump ship in late January. Although you do not generally have to pay any of the bonus to the employee, it is not impossible to think that in cases where the £1,000 is a substantial sum for the employer, employees could extort a proportion of it in return for not handing in their notice until February.
- Rule 6.3 states that an employee’s employment will be treated as terminated during that eligibility period (end of furlough to 31 January) if it “would fall as having been terminated but for a relevant provision”. “Relevant provision” for those purposes includes TUPE and a couple of other statutory provisions by which continuity of employment is preserved where there would otherwise be a termination. So on the face of it, if you have inherited that employee through a TUPE transfer, you cannot make a bonus claim in respect of him even though his employment with you is treated for all other purposes as continuing and unbroken. An odd proposition, you might think. First, it could put potential acquirers off making rescue bids for ailing businesses. Second, the accompanying guidance seems at first sight to say exactly the opposite: “You may be eligible to claim the bonus for employees of a previous business which (sic) were transferred to you under TUPE”. It then says that this only applies to anyone coming on board after 31 October, but even that is then qualified by the requirement that it is you, not your predecessor in business, who must have furloughed them. So actually the rule becomes that if you didn’t furlough them yourself, you lose the bonus for them, regardless of when or how you inherited them and irrespective of whether they had been on furlough with their previous employer.
- The guidance also states that HMRC will not pay the bonus if you made an incorrect CJRS claim and your employee was not in fact eligible for the CJRS support at all. This seems only to relate to claims for ineligible employees, and mercifully not to the absolutely inevitable errors which will be made within claims for eligible employees. Rule 5.3(b) allows HMRC (though does not require it, so there is some discretion reserved) to disregard inaccuracies in information from the employer about the prior year’s payments, provided that these inaccuracies do not make the bonus claim “abusive” or “contrary to the exceptional purposes of the CJRS”. [But NB, that is only disregarding those errors for CJRS bonus purposes and does not at all mean that HMRC won’t still be after you for errors in claims for the furlough support itself].
- Rule 2.4 of TD4 imposes a blanket prohibition on the making of bonus payments in those circumstances, errors or not. No indication is given of what “abusive” or “contrary to purpose” means in this context. The stated “purpose” in Rule 2.2 is that sums paid out under the bonus scheme “are used by the employer to continue the employment of employees whose employment activities have been adversely affected by the coronavirus… or the measures taken to prevent or limit its further transmission”. “Used to continue” implies that were it not for the bonus, those jobs would be lost, but there is nothing about that in the guidance nor any suggestion of any test of necessity as a condition of eligibility. Certainly there is no requirement that any of the bonus needs to be passed on to the employee. We do not consider that it would be abusive or contrary to purpose for an employer to apply for the money knowing that it intended to serve notice on 1 February, though for large-scale redundancies you could expect the most invigorating drubbing in the press if you did, as no-one will then remember all the time over which you had kept those employees on the books at your own expense when you did not need to.
- Last, some reminders on dates. Any claim for “ordinary” CJRS support must be made by 30 November 2020. The window for claiming the CJRS bonus is strictly limited to 15 February to 31 March next year. We are promised updated guidance by the end of January as to how to access the online claim service for that purpose.