COMPLIANCE
SudeepGanguli, employment taxes senior manager at PSTAX , discusses some employment taxes issues related to the C-19 crisis facing public sector employers C-19, and employment taxes challenges
F rontline workers are deservedly receiving tributes for their courage and dedication. But the crisis carries significant implications for all public body workers, including those tasked with understanding and interpreting new law and the arising tax implications. This article sets out some of the areas where payroll, human resources (HR) and finance staff have had to find pragmatic solutions to C-19 (COVID-19) related problems. CJRS When the chancellor first announced the Coronavirus Job Retention Scheme (CJRS) it was assumed that the scheme would be applicable to all employers. However, on reading the GOV.UK guidance, the perception of our public sector clients changed as it said it became clear that public sector organisations were ‘not expected’ to furlough workers because staff will be required to provide essential services and in most cases funding for staff costs would continue. Though the Treasury Direction does not place any restrictions on furloughing public sector employees, the key to whether the CJRS applies appears to be the method of funding. If the same staff funding mechanisms are in place as before the crisis, then the authority is expected to
the non-permanent people hired on a per-project basis and they can include those paid via PAYE (pay as you earn), umbrella companies and personal service companies. It should be noted that this is a separate scheme to the CJRS and there is no provision for the engager to reclaim the costs in this case. The Cabinet Office guidance on procurement policy (PPN 02/20) (https:// bit.ly/2SEfRqb) includes public sector contracting authorities. The FAQs published on 9 April 2020 help to clarify the position. PPN 02/20 is applicable to all contracting authorities, including central government departments, executive agencies, non-departmental public bodies, local authorities, National Health Service bodies and the wider public sector. If the worker is able to continue working from home, then they should be paid as usual. If unable to work due to C-19, the worker should be paid 80% of their pay (up to the maximum of £2,500 per month), backdated to 1 March 2020, where applicable. The guidance covers the calculation of pay where workers received less than £3,125 as well the entitlements for contracts that are due to expire. The government expects authorities to apply this as broadly as possible to ensure service continuity and protect infrastructure,
retain employees on the payroll. This could be in their usual roles or they could be redeployed to assist with the crisis. Therefore, where funding has been reduced or stopped altogether, there may be situations where furloughing staff is possible even for public sector employers. For example, a local authority runs several leisure centres, the staff costs for which are met from the membership fees paid by the public who join the centres. Another example is canteen staff who are paid from the income generated by the canteen. Clients have also asked questions about staff at theatres, entertainment venues and cafes in country parks. Although, as mentioned above, the key is the source of the funding for the affected staff, the legal and HR issues must also be addressed (e.g. giving the affected employees the appropriate written notice that they are to be furloughed). If you are unsure if a group of workers qualify for the CJRS, we recommend that you check with HM Revenue & Customs (HMRC) before making a claim. Contingent workers One aspect of the crisis that many of our clients were not aware of was the need to continue to support ‘at risk’ suppliers providing ‘contingent workers’ who are
| Professional in Payroll, Pensions and Reward | June 2020 | Issue 61 28
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