Until a few weeks ago, the concept of “furloughing” staff was a foreign one for UK employers. Now, however, it’s the hot topic on everyone’s lips. As you are probably aware, the furlough provisions are part of a range of measures introduced by the Government to help businesses cope with the impact of the COVID-19 pandemic, and allow employers to temporarily suspend staff and reclaim some of their pay from HMRC.
Unfortunately, employers and lawyers alike are having to deal with an ever-changing playing field, as they attempt to digest and interpret various iterations of guidance from the Government and HMRC – some of which even appears to directly contradict itself.
We are now in mid-April and the Guidance on the furlough scheme has had its fifth update. We also now have a Treasury Direction which sets out the legal basis of the scheme. Many of us are not used to interpreting legislation in this format – however, this is likely to be the only legislative provision we have.
There are a couple of key points arising from the Directive and latest Guidance:
- The furlough scheme (known as the Coronavirus Job Retention Scheme, or CJRS) has been extended to the end of June. The scheme was initially due to run until the end of May (with the possibility of an extension) but it is likely that the early extension has come about because of concerns that, if the scheme ended on 31 May as indicated, employers who are proposing to make more than 100 redundancies after the protection of the scheme had been removed would need to start a 45 day collective consultation period no later than 18 April. This extension buys everybody a little bit more time before such decisions have to be made.
- The CJRS scheme has also been extended so that employees who were on an employer’s payroll on 19 March 2020 (previously 28 February) can be considered for the furlough scheme. This might, however, not be quite the good news that it appears to be as the Guidance also talks about the fact that the employer must have notified HMRC of their payroll on an “RTI” (real time information system) on or before 19 March. For employers who run a monthly payroll towards the end of the month, employees who were not in the February payroll would likely not be on the RTI report until after the 19 March cut off point.
- HMRC have announced that the portal to lodge claims for reimbursement will be opened on Monday, 20 April 2020. They have produced a step-by-step guide for claiming on the portal, including all the information employers will need to have to hand, (www.gov.uk/government/publications/coronavirus-job-retention-scheme-step-by-step-guide-for-employers), as well as a guide on how to work out 80% of an employee’s wages (www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme).
- Some confusion has arisen following the publication of the Directive, which states that, in order to be furloughed, the employer and employee must “have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment”. This seems to be at odds with the previous Guidance which stated that the employer merely needed to write to the employee “notifying them” that they had been furloughed. The concept of “agreement” is therefore a new one. This confusion has been further compounded by the most recent iteration of the Government’s Guidance, which post-dates the publication of the Direction, which states: “employers must confirm in writing to their employee confirming that they have been furloughed… There needs to be a written record, but the employee does not have to provide a written response.” Employers who have relied on implied consent may, therefore, need to consider whether they now seek express agreement in light of the Direction. We will consider this further in a separate Q&A article, and set out the employer’s options in this scenario.
- The vexed question of annual leave while on furlough has also been addressed in the Employees’ Guidance (but not in either the Employers’ Guidance or the Directive). The Guidance confirms (unsurprisingly) that furloughed employees will continue to accrue annual leave. It also states that holiday can be taken while on furlough, although it goes on to say that the employer should pay the employee their usual holiday pay in accordance with the Working Time Regulations. This means that employers are obliged to “top up” the 80%/£2,500 furlough pay in order that the employee receives their proper holiday pay. The Guidance also confirms that employers are able to restrict when leave can be taken (or, presumably, by extension that they can insist on leave being taken). Interestingly, the section of the Guidance concludes by saying that, “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review,” meaning that the position could change yet again (and more uncertainty may arise from employers/employees relying on guidance which is subsequently changed).
Sherrards’ Employment Team is working on a comprehensive list of Q&As covering the key issues faced by our clients at this uncertain time. In the meantime, if you have any queries about the furlough scheme, including the recent changes to the guidance, please contact the Team via email@example.com