The latest Government guidance, and the associated Treasury Statement, provide yet further information about what sums an employer can claim for under the Coronavirus Job Retention Scheme (CJRS)
The guidance sets out that as an employer, you can claim for:
- 80% of your employees’ wages up to a maximum of £2,500 a month; and
- Employer’s National Insurance contributions that are paid on the subsidised furlough pay.
When it comes to calculating employees’ wages, the figures will depend on what type of contract they are on and when they started work.
- Employees who receive a monthly salary: employers can claim for 80% of employees’ salary (up to the limit) as per their last pay period prior to 19 March 2020. (Although the guidance also states that if an employer has calculated a claim based on employees’ salary as at 28 February – which was the crucial date in all the guidance issued before last week – an employer can still use this calculation, but only in respect of their first claim under the CJRS.)
- Employees who have been employed for 12 months or more and whose salary varies: employers can claim for the higher of either the same month’s earnings from the previous year or the average monthly earnings for the 2019-2020 tax year.
- Employees who have been employed for less than 12 months and whose salary varies: employers can claim for 80% of average monthly earnings since the employee started work until the date they are furloughed.
- Employees who have been employed for less than a month and whose salary varies: employers should calculate their earnings on a pro rata basis, and claim for 80%.
The Guidance also states that employers can claim under the CJRS for any “regular payments” that they are obliged to pay their staff, including wages, past overtime, fees and compulsory commission payments. Discretionary payments are expressly excluded.
The Treasury Statement that accompanies the guidance also deals with this point. It states that employers can only claim for “regular salary or wages”. The section defining what amounts to “regular” salary or wages expressly states that the payment must arise “from a legally enforceable agreement, understanding, scheme, transaction or series of transactions”.
This is likely to limit the claims which employers can make in relation to commission or overtime payments. Even where these payments are set out in the contract or in an agreement with the employee (which is not always the case), very often these arrangements are expressed as being discretionary. As such, it is unlikely that employers will be able to make a claim for the same under the CJRS.
Given the complexities in the guidance, we expect employers will have a number of questions when the claims portal goes live next week. Please get in touch with any of the team if you need advice or help in navigating these issues.