Coronavirus Job Retention Scheme updates ‘somewhat contractor-friendly’

Rishi Sunak has made smaller than sought but still nonetheless ‘contractor-friendly’ updates to the Coronavirus Job Retention Scheme.

The chancellor’s Treasury says that with immediate effect, it has made a “direction” so that the eligibility date for HMRC’s CJRS has widened from February 28th to March 19th.

That means all umbrella and limited company employees now qualify for the furlough scheme if they were on their brolly’s or PSC’s payroll on or before the 19th of last month.

'Will help many contractors'

“This will help many contractors who moved from their limited company to an umbrella as a result of the off-payroll working [rules],” says Crawford Temple, of Professional Passport.

While there is the caveat that the employer must have submitted RTI payroll data by 19.03.20 for the employee to be eligible, a status expert agrees that this update is the biggest overall.  

“More importantly for ContractorUK readers, is the update on the furloughing of a director,” says the expert, Rebecca Seeley Harris, the founder of ReLegal Consulting.

“A director can only undertake certain director’s duties relating to the filing of company accounts or provision of other information relating to the administration of the director’s company. This is a very narrow interpretation of director’s duties.”

'Acts of Parliament duties only'

The provision (at Coronavirus Act Schedule 6.6), implies prior guidance banning furloughed directors from Twitter still stands, as ‘tasks they do must only stem from Acts of Parliament.’

“Things [like LinkedIn updates could risk being seen as] an engagement in an activity which is promoting the business and contributing to revenue generation”, warns Liberty Bishop’s Stuart Marquis.

More positively for those who take the downtime due to coronavirus, the update confirms “training activities directly relevant to an employee’s employment” are permitted during furlough.

'When we come out of this'

David Smith, a director at employment management platform Flexr, said: “The company are allowed to ensure that staff are kept up to date [with training] while on furlough.

He explained: “It is crucial for businesses to ensure staff remain both motivated and up-to-date while they are on furlough. This way things will be slightly easier when we come out of this period.”

To its clients, law firm Brabners indicated that a bigger relief will be the Treasury’s update to CJRS eligibility criteria in relation to workers who have been made redundant.

'At last...'

In particular, workers employed as of Feb 28th, but who were laid off or stopped working after then but pre-March 19th, are now eligible if the employer rehires and furloughs them.

“At last the government has confirmed that the CJRS is not limited to those employees who would otherwise be made redundant,” reflected Brabners’ employment head Nicholas Campbell.

“It [now] applies to those furloughed 'by reason of circumstances as a result of coronavirus or coronavirus disease.”  

As to taking employees back on again, the law firm sounded a cautionary note, however:

“When reengaging employees as it has been made clear in the guidance available that normal employment law principles will still apply during the furlough leave, meaning the employee will accrue annual leave entitlement.”

'Unfortunately issues remain'

Holiday allowance is one of the two big areas which umbrella companies said they were ‘pressing’ Mr Sunak about (they wrote to the chancellor directly), because they wanted it amended.

“Having now had time to consider [the CJRS updates] unfortunately it would appear that the previously highlighted issues [for umbrella companies] remain,” Professional Passport’s Mr Temple reflected on LinkedIn yesterday.

He added: “Where an umbrella operates with a salary equal to NMW and a discretionary bonus the bonus is excluded – in my opinion. Not what we wanted or pressed for.

“[And] holiday pay also seems to accrue on the furloughed workers during this time which is a pure cost to most providers and probably makes the arrangements financially unworkable for most.”

'Requires unravelling'

Another adviser to contractors who isn’t thrilled about the new CJRS updates and so believes that further updates are needed if the scheme is to succeed is contracts specialist Adrian Marlowe.

But the Lawspeed managing director says he’s struggling with the new, existing HM Treasury details for what they do contain, rather than what they don’t.

“The new guidance is clearly intended to be helpful but it still requires a bit of unravelling to understand exactly what the requirements are,” he said.

“It must be possible for the government to use more straightforward language especially when it comes to applying the qualifying dates.”

'No clarity'

On behalf of the Association of Recruitment Consultancies, of which he is chairman, Mr Marlowe added: “However there is now clarity that the scheme applies to agency workers.

“Yet there is no clarity as to what happens if the agency worker takes up another job, a point we have raised with government.”