New Treasury Direction including changes in the form of Furlough Agreements


The Government has issued a new Treasury Direction modifying the Furlough Scheme. HMRC are still required to be responsible for the payment and management of amounts payable and will continue to provide its own Guidance.

The Direction does not deal with the extension of the Scheme until October but further Guidance is expected by the end of May. Some key points to note are:

  1. The express requirement that an agreement be in writing has been removed. Now, the agreement can be in writing or “confirmed in writing by the employer”, which can still be done by email (para 6.7b).

  2. Employers need to retain the agreement “or confirmation” until at least 30 June 2025 (para 6.7c).

  3. In relation to SSP, the previous Direction said employees could not go onto Furlough until the original SSP period had ended. Now it is until immediately after the end of the period of incapacity for work which is “determined by an agreement between the employer and employee” (para 6.3).

  4. In relation to pay, this now provides that regular pay can only vary where the amount arises from a non-discretionary payment (which is defined at para 7.19 and includes overtime, fees, commissions, recognition for additional responsibilities AND requires a legally enforceable agreement, understanding, scheme or transaction which prescribes the method of calculating the amount of wages or salary (whether or not that method involves an exercise of discretion).

Please contact us if you wish to discuss further.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/886959/CJRS_DIRECTION_No2___20_05_2020.pdf

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