New guidelines on the job retention scheme has clarified which non-employees’ companies can claim for under the CJRS these include:
Office holders can be furloughed and receive support through the scheme. Furlough and other payments will need to be agreed between the office holder and the party who uses PAYE on the income they receive for holding their office.
If an office holder is a company director or member of a Limited Liability Partnership (LLP) furlough arrangements should be adopted formally as a decision of the LLP or company.
Salaried company directors are eligible to be furloughed and receive support. Company directors owe duties to their company as per the companies Act 2006. If a company considers it follows statutory duties of one or more of its individual salaried directors, their board can decide that such directors should be furloughed. This should be formally adopted as a decision of the company and noted in company records and communicated in writing to the director concerned.
Where a furloughed director needs to carry out a particular duty to fulfil statutory obligations while being on furlough, they can do this provided they do no more than judged necessary for that purpose, and not carry out any work that would generate commercial revenue or provides services to or on behalf of the company.
This rule also applies to salaried individuals who are directors of their own personal service company.
Company Directors with annual pay period
Those who are paid annually can claim furlough if they meet the relevant conditions. This includes being notified to HRMC on an RTI submission on or before 19th March 2020, relating to payments for 2019 to 2020. Requirements for payments in the tax year 2019 to 2020 applies for any employee being claimed for under the scheme.
Salaried Members of limited liability partnerships
Members of LLPs designated as employers for tax purposes under the income tax act are eligible to be furloughed and receive support through this scheme. To furlough a member, the terms of the LLP agreement may need to be varied by a formal decision of the LLP, to reflect the fact that the member will perform no work in the LLP for the agreed period of furlough.
If agency employees are paid through PAYE, they are eligible to be furloughed and receive support through the scheme, including when they are employed by umbrella companies.
Furlough must be agreed between the agency and the worker, but it would be advised to discuss furlough needs with any clients involved. Agency employees should perform no work during any periods of furlough, the same as employees.
Where an agency supplied clients with workers who are employed by an umbrella company that operates PAYE, it will be up to the umbrella company and worker to agree to furlough the worker or not.
Where limb workers are paid through PAYE they can be furloughed and receive support from the scheme.
Those that pay tax on their trading profits through Income Tax Self-Assessment may be eligible for the self-employed income support scheme.
Contingent workers in the public sector
Guidance has been issued by the cabinet office on how payments to suppliers of contingent workers impacted by Covid-19 should be dealt with where the department is a central government department, an executive agency or a central government department or a non-department public body. The guidance applies to agency workers paid through PAYE as well as those paid through umbrella companies on PAYE and off payroll workers via a personal service company.
Contractors with public sector engagements IR35 off payroll working rules
Public sector bodies must follow the crown commercial services guidance in most cases.
Where organisations are not primarily funded by the government and whose staff cannot be deployed to assist with the coronavirus response, it might be appropriate to claim under the coronavirus job retention scheme.
If a public sector organisation wishes to furlough a contractor, they would need to confirm this with both the contractor’s personal service company (PSC) and the fee-payer. It will then need to be formally agreed that the contractor will do no work for the public sector organisation during furlough leave. The fee payer would be able to apply for the furlough 80% payment. The PSC must report the amount it pays to the contractor on the PAYE Real Time Information return.
If you would like further information on the Job Retention Scheme or any HR issue, please contact Clover HR on 0121 516 0299 or email us at firstname.lastname@example.org