HMRC has published further guidance relating to the Coronavirus Job Retention Scheme (CJRS).
Past overtime, fees, commission, bonuses and non-cash payments
Employers can claim for any regular payments they are obliged to pay their employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
Benefits in kind and salary sacrifice schemes
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable benefits in kind.
Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary.
Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the CJRS.
Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
Apprenticeship levy and student loans
HMRC confirmed that CJRS does not cover the apprenticeship levy and student loans, and that these should continue to be paid as usual.
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW)/ Apprentices Minimum Wage (AMW) for the hours they are working or treated as working under minimum wage rules.
This means that furloughed workers who are not working can be paid the lower of 80 percent of their salary or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage.
However, time spent training is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from April 1 2020. As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours.
Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100 percent of the training time.
Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time employers are recommended to seek independent advice or contact Acas.