On Friday last week the Chancellor issued the third and probably final Treasury Direction in relation to the Coronavirus Job Retention Scheme (CJRS). This is “the law” that will govern the flexible furlough arrangements from 1 July.

As with the two previous Treasury Directions, this one is horribly complicated to navigate – to the point where the less trusting parts of you begin to wonder if it represents a deliberate attempt to deter CJRS applications by making sure that whatever sum the employer claims, it is almost bound to be wrong. For example, paras 14.5 and 14.6 read “A CJRS claim must not be made if the CJRS claim period of the claim would include a day that is not a permitted CJRS day”, being a day which “falls in a period that is (or will be) covered by a CJRS claim period (“relevant CJRS claim period”) and does not fall in a period covered by a CJRS claim period that begins on a different day to the day on which the relevant CJRS claim period begins, or ends on a different day to the day on which the relevant CJRS claim period ends”. Got that? Anyone? The sole attraction of this degree of opacity in the drafting of the Direction is that HMRC’s ability to show wilful non-compliance with the CJRS claim rules in any later audit or prosecution around this sort of thing will be more or less nil – no jury will convict.

A new sentence has crept unheralded into the Direction under the heading “Purpose of CJRS”. This says that “Integral to the purpose of CJRS is that the amounts paid to an employer pursuant to a CJRS claim are used by the employer to continue the employment of employees in respect of whom the CJRS claim is made …”. Is this intended now to curb the ability of employers to make employees redundant during furlough? Presumably not, as nowhere does it say this expressly and it would also be the small matter of three months late to the party in that respect. If it means that you can only claim under the Scheme if you pay the sums on to your staff and/or that you can only do that while they are still employed, then it adds nothing to what we already know. Alternatively, is the implication from “used … to continue the employment” that claims can only be made where the alternative would have been redundancy? But then there would not need to be any rules about bringing people back from furlough because the moment the CJRS support stops they would all have to be dismissed anyway, just to show that only the CJRS money had kept them in employment. So if it was not intended (and almost certainly not effective) to change anything, why add this in now? Did someone think it meant something or is it just a political marker for a later date when the legacy of the scheme comes to be examined?

What else do we learn?

  1. Employers will have until 31 July to make any claims under the CJRS in respect of the period 1 March to 30 June. Second, you will have to make separate claims to cover furlough days in different months, even though the employees have been furloughed continuously. This is more sensible than it sounds – it is to reflect the stepping down of the CJRS contribution each month over the next 4 months and prevents HMRC from having to apply different rates of support within the same grant. July to October are defined in the Direction as “CJRS Calendar Months”, which are just like normal calendar months but more confusing.
  2. To be eligible to make a claim under the flexible furlough scheme, an employer must have an agreement in place with the employee in relation to that. As before, this means in practical terms that you have to tell your employee in writing what days/hours you want him to work, that he will be paid for those at his full salary rate, that he will be on furlough and must not work for you for the rest of the week/month and that he will get his furlough rate for that down time. Then he indicates his agreement to that by doing what he is told. Note, however, that TD3 says that the agreement must be made before the beginning of the period to which the claim relates, which creates a possible legal problem for contract law nerds – on the assumption that HMRC is not requiring written acceptance by the employee, how can he indicate his acceptance to a flexible furlough arrangement other than by starting it? But that means that technically his acceptance of the terms (and therefore the making of the agreement) is not before the start of the period of flexible furlough but simultaneous with it, so potentially invalidating the agreement for CJRS purposes. Clearly the only decent thing to do with that possible argument is to ignore it – it is impossible to believe that after its hasty retreat when that written-agreement proposition appeared in TD1, HMRC would make the same mistake again. Almost impossible. Evidence of that written confirmation must be kept until at least 30 June 2025.
  3. From 1 July, the minimum claim period must be seven or more consecutive days, except where you are claiming for the first few or last few “orphan” days in a month and you have already claimed for the period ending immediately before it. For no obvious reason, this requirement to have claimed in respect of an immediately prior period does not apply where the claim period is a week or more . If there is a considered rationale behind it, it may be to limit not the amount claimed but just the sheer number of claims requiring to be processed by HMRC. This issue is side-stepped if your claim period is the calendar month, remembering that that is the period for which you are seeking support under the CJRS for your furloughed workforce as a whole and does not mean that any of the individual employees must have been on furlough for the entirety of that period.
  4. There are some fantastically complicated provisions governing how employers should calculate “usual hours” for the purposes of determining the amount of CJRS relief which can be sought under the flexible furlough scheme. Somehow they look even worse here than in the guidance. Not for TD3 the cop-out of just taking basic contracted hours or a simple 12 week average backwards from a set pre-pandemic date. Buried somewhere underneath here is a stab at a simple pro-rating but depending on how the employee’s working time is determined by his contract, you get to usual hours via CP x [H/P], CP x [H/D], H x [CD/SP] — there may be others too but they are drowned out by the racking sobs of the person trying to apply them to hundreds or thousands of employees for a claim period of what may be less than a week.

This is really terrible law-making – unnecessary, incoherent, neither comprehensible to its intended audience nor operable in practice, over-engineered and under-thought. The exceptionally worthy aims of the CJRS deserved better.