Job retention scheme rules

Job Retention Scheme Update

Over the past couple of days there have been some more developments and guidance released by the government, specifically in relation to the Job Retention Scheme, and how they apply to company directors of owner managed businesses.

HMRC have finally clarified that the scheme extends beyond employees, and also covers the following groups, provided they receive some form of remuneration via PAYE:-

·         Office Holders (including company directors)

·         Salaried members of Limited Liability Partnerships (LLPs)

·         Agency Workers (including those employed by Umbrella companies)

·         Limb (b) workers

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme.

Previously there was some confusion over the application of this scheme to company directors, due to the fact they are required to carry out certain duties to their company, in accordance with the Companies Act 2006. The JRS states that when an individual is furloughed, they are not allowed to undertake any work, and as such, this seemed to rule out company directors, especially those of owner managed businesses.

HMRC have now clarified the position by stating the following:-

“Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.


This also applies to salaried individuals who are directors of their own personal service company (PSC).”

 For Agency Workers, including those under Umbrella companies, the following has been stated:-

“Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.”

The furlough scheme is due to launch on 20 April and HMRC will be announcing over the coming days the procedures that will be required in order to process claims correctly. If you want to participate in the JRS and furlough your employees, or yourself, please contact us.

Posted in covid-19.