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Furlough - more change!

It seems that every time I commit something about the Coronavirus Job Retention Scheme (CJRS) to paper, things change again!

Since my article on 15 April 2020, there have been two further iterations of the government guidance on furlough (on 17 and 20 April 2020), so we are now on the sixth version! These have clarified some issues, including relating to holiday during furlough, but left others unanswered.

There also remain some unhelpful discrepancies between the Treasury Direction to HMRC dated 15 April 2020 (which contains authority and instructions for making payments under the CJRS) and the more recent government guidance.

In addition, there have been a couple of important changes to SSP, namely confirmation that:

  • SSP cannot be paid while on furlough (which we already knew); and
  • if a “shielding” individual is unable to work (because they fall within the extremely vulnerable category and have been advised to shield), they are deemed to be incapable of work and are eligible for SSP.

This second SSP change has caused confusion, as the Treasury Direction states that a person who is receiving/eligible for SSP cannot be furloughed until the end of the SSP period, which suggests that a “shielding” person cannot be furloughed for the 12-week shielding period. This directly contradicts government guidance that “shielding” individuals (and those who need to stay home with them) can be furloughed!

Finally, HMRC’s claims portal opened on 20 April 2020 and first payments are due to be made within 6 working days.  

KEY CHANGES/CLARIFICATIONS

Extension of the CJRS

The scheme will now be in place until the end of June 2020 and may be extended further.

Rationale behind furlough

When the CJRS was announced on 20 March 2020, its stated purpose was to allow businesses to retain employees whom they would otherwise have to “lay off”. However, the government’s wording has shifted since then and the latest guidance omits any reference to redundancy risk, simply stating that the scheme is designed “to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy.”  

The Treasury Direction also reflects this, stating that the furloughing must simply be “by reason of circumstances arising as a result of coronavirus or coronavirus disease”.

How employers should place employees on furlough

The latest government guidance states that employers must “confirm in writing to their employee” that they have been furloughed and, “if this is done in a way that is consistent with employment law”, that will constitute valid consent. It also states that “the employee does not have to provide a written response”.

Unfortunately, this conflicts with the Treasury Direction, which states that an employee can only be furloughed if the employer and employee “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”.

In light of this discrepancy, it is safest to have a written agreement with an employee who is being furloughed, as we have advised from the outset.

Furlough and holiday

Government guidance has- finally- confirmed the position regarding holiday and furlough, albeit this is currently only contained in the CJRS Guidance for Employees and not the Guidance for Employers. The Employee Guidance confirms as follows:

  • Whilst furloughed, employees continue to accrue leave as per their employment contracts. Employers and employees can agree to vary holiday pay entitlement as part of the furlough agreement but cannot go below the minimum of 5.6 weeks of statutory paid annual leave each year.

  • Employees can take holiday whilst on furlough. NB An employer must still consent to this and can restrict when leave is taken (both during furlough and the recovery period) if there is a business need.
  • Holiday taken during furlough should be paid at an employee’s usual holiday pay rate, in accordance with the Working Time Regulations, namely:
    • at an employee’s normal rate of pay; or
    • where an employee’s rate of pay varies, calculated on the basis of the employee’s average pay in the previous 52 working weeks.

  • Employers must pay the additional amount due over the grant, “topping up” the 80%.

  • If an employee usually works on bank holidays, their employer can agree that this is included in the grant payment. If an employee usually takes a bank holiday as leave, their employer must either top up their furlough pay (to their usual holiday pay) or give them a day’s holiday in lieu.

Guidance on how to claim

Detailed guidance regarding how to calculate the sums you can claim and how to submit a claim are available at:

If you have any queries, please feel free to call or email our employment team who will be able to advise on the matter.

 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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