The Job Retention Scheme: have you got it right?

13th May 2020

DAS Law Associate Carly Owen looks at the latest developments regarding the government’s Job Retention Scheme…

Initial government guidance

The initial requirement on employers was merely to write to staff stating that they were looking to make them furloughed and inform them of this.

This requirement was repeated in subsequent editions of the Government’s Guidance for Employers and expanded to say that the employer was required to keep the written notification for five years.

There did not appear to be any specific timeframe when the employer needed to do this, i.e. it did not have to be sent before or on the first day of them being furloughed. This was the position for three weeks.

Current employer obligations

On 15 April 2020 the government released the Treasury Direction to HMRC regarding the Job Retention Scheme. This set out that HMRC will only recognise furlough as being valid if the employer and employee have agreed in writing that the employee will cease all work in relation to their employment.

This is more than the initial guidance to employers set out.  This requires more than notification to an employee, it requires actual written agreement with them.

What happens if this was not done?

The question that will be asked by many employers is if they did not obtain written agreement with their employee and merely provided written notification what happens now? Will HMRC meet the claims?

In short, HMRC has to follow the Direction as set out.  That said, if HMRC does refuse to meet the claims on the basis that a written agreement was not obtained there is a strong argument that employers who have furloughed staff in reliance of the government guidance at the time could have grounds for a judicial review against HMRC.

Judicial Review is essentially a judge reviewing a decision of a public body and in this case it would be likely to be brought on the grounds of “Legitimate Expectations”, i.e. expectations that HMRC would act in a particular way based on guidance but it has now acted differently. The outcome of which could be that HMRC is ordered to quash its decision and consider it again.

That said, it is very doubtful that the issue with the wording is now likely to lead down the Judicial Review route. The reason for this is further guidance was produced by HMRC after the Treasury Direction on 15 April 2020 was released which set out again that the requirements for making a claim was only written notification by the employer and evidence that this would be kept for five years.  There was no mention of a written agreement.

It therefore appears that HMRC will accept claims without evidence of the employee’s written agreement. The reiteration of this position in a guidance published after the Treasury Direction can only act to demonstrate the stance HMRC are looking to take when considering claims. Despite this, it is advisable to speak to and consult with your employees when considering furlough and adopt best practice of writing to the employees and getting written agreement.

What if a claim to HMRC is rejected?

There do not yet appear to be any reported incidents of claims being rejected for lack of evidence of an agreement with employee. In the event that this does occur, however, HMRC has set up a helpline dedicated to support the portal (0800 024 1222) and when online, there is an option for a ‘chat’ service which is reportedly helpful.

What should employers do going forwards?

When you have objectively selected the employees that you want to furlough, it is advisable to do the following:

  • Confirm the employee’s new status of being placed on furlough;
  • Obtain the employee’s consent to furlough and the reduction in salary and record this in writing;
  • Instruct the employee to cease all work during the furlough period;
  • Obtain confirmation that the employee agrees to cease all work in relation to the furlough period;
  • If the furlough period is to be extended, provide further notification to the employee in writing;
  • Retain a record of the agreement for five years.

ACAS have published a template furlough agreement, which you will find at their website.

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created. Note that the information was accurate at the time of publication but laws may have since changed.

4 things you need when you run a business from your home

Running a business from your home could make it easier to balance your home life with your work, but there are a number of extra rules that you will need to consider.

March 2021 Learn more
Online shopping in the time of Covid-19

Thomas Pertaia, Legal Adviser from DAS Law, explains what you need to know about your consumer rights.

May 2020 Learn more
COVID-19 – Where the law stands on access to your children

The COVID-19 pandemic has severely impacted child care arrangements for many separated parents and their children. Ashlee Robinson explains what you need to know.

May 2020 Learn more

Read more from the DAS Law blog

Employment disputes , Growing your business , Protecting your business , Setting up a business Farming tenancies: what you need to know

Mark Woodman, Solicitor at DAS Law, looks at what farmers need to know regarding a Farm Business Tenancy.

June 2021
Employment disputes , Protecting your business How to keep your staff and customers safe when re-opening your business

As the country continues taking steps toward a return to normal, Covid restrictions remain in place in order to allow the reopening process to be conducted as safely as possible.

June 2021
Employment disputes Covid-19: Is your business worried about eviction?

The Covid-19 crisis has seen an unprecedented number of businesses facing collapse. But what happens if your business has an opportunity to get back on its feet only to face eviction from the landlord?

May 2021
Employment disputes , Protecting your business The return to work: a guide for employers

Molly-Ellen Turecek looks at what employers need to consider when returning employees to work.

May 2021
Employment disputes Can employees refuse to return to work if they feel unsafe?

Can an employee refuse to return to work due to fears of contracting Covid-19? Where does the law stand if employees decide to ‘take a stand’?

May 2021
Employment disputes Is there a time limit for providing an employee with a P45?

As an employer, you are required to tell HMRC when somebody leaves or retires, and deduct and pay the correct tax and National Insurance.

May 2021
Employment disputes , Protecting your business The Return to Work from Covid: How businesses can stay on the right side of the law

Although lockdown restrictions are easing for many businesses across the country, health & safety and social distancing measures still apply.

May 2021
Employment disputes What you need to know about the gig economy

Allison Lewis, Head of Employment at DAS Law, looks at what you need to know about the gig economy.

March 2021
Employment disputes Can employers insist employees have the Covid-19 vaccine?

A number of UK companies recently announced that they will insist that all their employees must have the Covid-19 vaccine if they wish to continue working for them.

February 2021
Employment disputes Redundancy: an employer’s guide

Simon Roberts and Molly-Ellen Turecek from DAS Law look at seven things an employer needs to know about redundancy.

January 2021
Employment disputes Dismissal and Redundancy: 7 things employees need to know

Molly-Ellen Turecek and Simon Roberts look at what an employee needs to know about redundancy.

January 2021
General advice , Employment disputes Beware the perils of sharing colleagues’ virtual Christmas party antics on social media

Just because the party is being held online, it should still be treated as an extension of the workplace with both employers and employees conducting themselves appropriately.

December 2020
Employment disputes International Stress Awareness Week: your workplace rights

To mark International Stress Awareness Week, Jade Harrison, legal adviser at DAS Law, takes a look at what the law says your employer needs to do about workplace stress

October 2020