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How the Chancellor’s new Treasury directions modify the effect of the Coronavirus Job Retention Scheme (CJRS) as established by the earlier direction dated 15 April 2020?

The updated direction notes an extension of the scheme to the 30 June 2020 (which is now October and as announced already), but the main points are:

1. Change in the wording of the provisions that set out the form of agreement which is necessary to place an employee on furlough,
2. Amendment to the wording of statutory sick pay provisions
3. Amendment to the definition of regular pay that can be claimed under the CJRS.

The direction fails to comment on the changes to the scheme that are expected to take effect in August. There is widespread speculation that there has been a failure to mention these changes as they are still in the process of being decided by the Government.

Contract or no Contract?

The new wording on the form of agreement required removes the explicit requirement of an agreement in writing.  It has now been confirmed that the agreement between employer and employee must specify “the main terms and conditions upon which the employee will cease work in relation to employment” and can be expressly or impliedly incorporated into the contract and can be made or confirmed in writing (i.e. after the agreement). There is a requirement that the employer retain the agreement or confirmation until at least the 30 June 2025.

SSP

The direction confirms that if 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 was paid or due to be paid. Bringing any period of incapacity to an end should be determined by agreement between employer and employee.

What is Regular Pay?

There has now been clarification that regular pay means “pay that cannot vary according to a relevant matter except where the variation in the amount arises from a non-discretionary payment.”

But what is “relevant matter”? This includes business performance, employer’s contribution, performance of duties and any similar considerations or otherwise payable at the discretion of the employer or any other person (e.g. gratuity).

Non-discretionary payments are payments such as overtime, fees, commissions, or piece rate payments are only covered if a legally enforceable agreement, understanding, scheme, transaction or series of transactions prescribe the method of calculating the amount of wages or salaries which are payable.

Information correct at the time of writing.

For updated government guidance please see: 

• Claim for wages through the Coronavirus Job Retention Scheme
• Treasury Direction made under Sections 71 and 76 of the Coronavirus Act 2020