On 26 March HMRC provided much welcomed further details for employers on its Coronavirus Job Retention Scheme (CJRS), and also published guidance for employees. This further clarity is welcome as it will allow many more employers to now make key decisions and communicate what this means to their employees.
The guidance provides more information in respect of a number of areas and as a consequence the outline of the scheme is now much clearer. The headline features include:
Eligible businesses: generally this is all employers who had a PAYE scheme and UK bank account on 28 February 2020.
Scheme duration: 3 months from 1 March 2020, although this may be extended.
Employees who can be furloughed: generally this is any employee who was employed on 28 February. There are specific rules for those on sick, maternity or unpaid leave, and therefore these populations should be considered separately.
Conditions for furloughed employees: the furlough should be for a minimum period of 3 weeks, up to 3 months (although this may be extended). Employees cannot work for their employer whilst furloughed, however it may be possible for them to undertake training.
The amount which can be claimed under CJRS: this is the lower of 80% of regular wages, or £2,500 per employee, per month. In addition the costs of employers NIC and minimum pension auto enrolment costs can be reclaimed. There are specific rules which apply when determining regular wages for those who are salaried, and also those with variable pay. There are also rules around how to calculate the pay for those with less than 12 months employment and those on zero hour contracts.
Source is PwC (Price Waterhouse Coopers). From same website;
EU Direct Tax Newsalert European Commission adopts temporary State aid framework enabling EU Member States to support their economies during the COVID-19 crisis
It goes without saying that the COVID-19 pandemic is first of all a humanitarian crisis. The outbreak however also triggers a major shock to the global and EU economy.
EU temporary State aid framework
On 19 March 2020, the European Commission adopted a temporary framework setting out the conditions for EU Member States to support the economy during the COVID-19 crisis. The communication lays down a frame-work that allows Member States to tackle difficulties that undertakings currently face fol-lowing the COVID-19 outbreak, whilst at the same time maintaining the integrity of the European internal market and ensuring a level playing field.
The adoption of the temporary State aid framework by the Commission follows the communication on a coordinated economic response published on 13 March 2020.
Content of the framework
Already today there are certain regulations in place under which certain State aid can be granted to cope with the COVID- 19 crisis (such as the de minimis rules or the existing General Block Exemption regulation). These existing rules may however not be broad enough and therefore the temporary frame-work lists a number of additional measures that the Commission temporarily considers as acceptable under EU State aid rules:
Aid in the form of direct grants, re-payable advances, tax advantages
State aid schemes of up to EUR 800k to un-dertakings that face a sudden liquidity short-age or unavailability as a result of the COVID-19 outbreak;
Aid in the form of guarantees on loans
Member States can provide public guarantees on loans for a limited period and loan amount to ensure access to liquidity to undertakings;
Aid in the form of subsidised interest rates for loans
Member States can grant loans at reduced interest rates for a limited period and a limited amount. These loans may relate to both investment and working capital needs;
Aid in the form of guarantees and loans channelled through credit and financial institutions
Member States can grant aid via banks. Such aid channelled through banks will not be regarded as aid given to the banks, but directly to the undertaking. However, certain safe-guards are introduced to limit distortions to competition;
Short-term export credit insurance
Marketable risks (risks in respect of debtors established in certain countries) can in principle not be covered by export-credit insurance with the support of the Member States. However, following the COVID-19 outbreak, it cannot be excluded that cover for such marketable risks could be temporarily unavailable. The temporary framework provides additional guidance on how the unavailability can be demonstrated. In this case, short-term export credit insurance can be provided by the Member State.
The temporary framework also provides monitoring and reporting obligations for the Member States. Member States must publish relevant information on each individual aid granted and submit a list by 31 December 2020 of measures put in place.
Countries taking measures in line with the temporary framework need to notify these rules to the Commission. However, these aid schemes can be approved rapidly upon noti-fication by the Member State. Already on 21 March, i.e. less than 48 hours after the adoption of the temporary framework, France notified and received approval for three specific measures to support the French economy.
Takeaway
The temporary framework set outs the conditions under which EU Member States can grant State aid to undertakings. Member States are given a broad scale of possibilities ranging from direct grants to reduced inter-est rates and State guarantees on loans.
It is expected that many EU Member States will turn to the temporary framework to take specific measures to support their national economies. For companies benefitting from these measures, this framework - subject to appropriate notification by the Member State - can provide important legal certainty that the measures are acceptable under EU State Aid rules
