How does salary sacrifice affect the Government’s Coronavirus Job Retention Scheme?
- Employee pensions contributions are often paid by way of salary sacrifice arrangements.
- Use of such arrangements may reduce the amount of wage an employer can claim under the Coronavirus Job Retention Scheme, as the reimbursement is calculated by reference to an employee’s actual pay as at 28 February 2020, hence post sacrifice pay.
- Using the Coronavirus Job Retention Scheme does not in itself bring a salary sacrifice arrangement to an end, but where an employer wishes to maximise the amount of an employee’s pay that will be covered by the CJRS, the employer and employee(s) concerned may agree to terminate the salary sacrifice arrangement as part of furlough. HMRC has recently announced that the Covid-19 pandemic will be considered a “life event” (i.e. one of the permitted reasons to break a salary sacrifice arrangement mid-term), if the employment contract is updated accordingly.
Related FAQs
On 30th April 2020, the CMA issued a guidance note setting out its views about how the law operates in relation to refunds.
Where a contract is not performed as agreed, the CMA considers that in most cases, consumer protection law will generally allow consumers to obtain a refund.
This includes the following situations:
- Where a business has cancelled a contract without providing any of the promised goods or services
- Where no service is provided by a business, for example because this is prevented by Government public health measures
- A consumer cancels, or is prevented from receiving any services, because Government public health measures mean they are not allowed to use the services.
In the CMA’s view, this will usually apply even where the consumer has paid what the business says is a non-refundable deposit or advance payment.
This positon reflects the CMA’s previous guidance which they had issued in relation to the requirement of fairness in consumer contracts under the Consumer Rights Act 2015, which was that a clause in a contract that gives a blanket entitlement to a trader to cancel a contract and retain deposits paid is likely to be unfair, and therefore unenforceable – it would be unfair to a consumer to lose their deposit if the contract is terminated without any fault on their part, and if they had received no benefit for the payments made.
The CMA’s latest guidance therefore confirms their view that the Covid-19 outbreak does not change the basic rights of the consumer, and that they should not have to pay for goods or services that they do not receive.
It is clear that we are emerging from a completely unprecedented period of disruption for many businesses, and this may have had a huge impact on their contractual arrangements both with suppliers and customers.
As the lockdown eases, and we get back to business, it’s important that businesses take stock of what has happened, and ensure they review and address the legal and contractual consequences of what has been happening since the start of the global pandemic.
You can claim for regular payments you are obliged to pay staff such as non-discretionary overtime, non-discretionary fees, non-discretionary commission and piece-time payments. Overtime in this context is referred to as ‘past overtime’ in the updated guidance which would suggest that you should use the variable pay calculation (see FAQ above) for those who regularly carry out overtime.
No. This bill relates to corporate insolvencies only. Should you require any advice as to personal insolvency situations, please contact our team.
Borrowers will not have to pay a guarantee fee. Lenders will pay a fee to access the scheme. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, allowing smaller businesses to benefit from no upfront cost.
British Business Bank has indicated that following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. Each business should check the terms of the loans being made to ensure this is the case and what the interest rate and prepayment fees will be following the period in which the Government makes payment of these amounts.