On Saturday, 4 April, the Government published further guidance on the Coronavirus Job Retention Scheme, answering some questions on how furlough leave will operate. The key points can be summarised as follows:-
- The Guidance states that the scheme is designed to help employers whose operations have been severely affected by Coronavirus to retain their employees and protect the UK economy whilst going on to state that the Government recognises different businesses will face different impacts from Coronavirus. Previous Guidance referred to those who “would otherwise have been laid off” and where the employer had “no work for you” or could not “cover staff costs”. This suggests a change of focus away from the employee’s circumstances towards the effect of the pandemic on the business as a whole. HMRC retains the right to retrospectively audit all aspects of the scheme and may claw back fraudulent or erroneous claims and the lack of clarity in this area is concerning. Employers should keep a careful note of why they have decided to use the scheme and of discussions with employees regarding the need for furlough in the event of any future HMRC audit.
- Employees who are shielding in line with public health guidance (or who need to stay home with someone who is shielding) can be furloughed if they are unable to work from home and you would otherwise have to make them redundant.
- Employees who are unable to work because they have caring responsibilities resulting from COVID-19 can be furloughed. This appears to apply even if their roles are not redundant. For example, employees that need to look after children can be furloughed.
- Employees can be furloughed multiple times. So employers can definitely rotate groups of employees on and off furlough but each period of furlough leave must be for a minimum of 3 consecutive weeks.
- Employees can start a new job with a different employer when on furlough. This means that certain employees might end up earning 80% of their current salary and 100% of a new salary. The new guidance does say that having a second job has to be allowed under the old/existing employment contract with their current employer.
- The Guidance confirms that employers must discuss and agree furlough leave with employees. Employers must notify employees of their furlough status in writing. This requirement was not in the previous guidance. Also, the employer must keep the record of that written notification for 5 years.
- An employer can reclaim 80% of compulsory (presumably meaning contractual) commission back from HMRC, as well as basic salary. This was previously excluded. Good news for sales staff whose income is heavily based on commission. However, it can only be referring to the commission from past sales as the furloughed employees cannot be completing new sales when on furlough leave.
- Employers can reclaim 80% of “fees” from the HMRC but we are not sure what is meant by “fees” and the term has not been defined.
- The 80% does not include non-monetary benefits (e.g. health insurance or a company car).
- Employers can extend fixed term contracts and then furlough the employee.
- The position of company directors has been clarified. They can discharge statutory duties whilst on furlough “provided they do no more than would reasonably be judged necessary for that purpose”. This may be limited duties such as completing their annual return but they must not do any other work.
- The Guidance also clarifies that salaried members of LLPs, agency works and Limb (b) workers, can be placed on furlough provided they are paid through the PAYE system.
- The Guidance further clarifies that if an employer made employees redundant, or they stopped working for the employer on or after 28 February 2020, the employer can re-employ them, put them on furlough and claim for their wages through the scheme.
- This therefore clarifies that if an employee had resigned to take up another job, the old employer could re-hire them to put them on furlough leave. However, there is no requirement for employers to do this. It remains at the discretion of the individual employer and will have to be carefully considered taking into account the specific circumstances of each case.
Unfortunately, no guidance was given about taking or being made to take annual leave during furlough. We would refer you to our previous briefing note of Friday, 3 April, for our thoughts on annual leave and furlough.
A link to the updated Government guidance of 4 April can be found here.
This article does not constitute legal advice and specific advice should be sought in respect of particular cases.