On 20 March 2020, the government announced the introduction of ‘Furlough Leave’ as part of the Coronavirus Job Retention Scheme (CJRS), to allow businesses to retain employees whom they would otherwise have to “lay off”.
The initial government guidance on Furlough Leave was somewhat limited and left many unanswered questions. However, over the last few weeks, the guidance has been revised and added to, most recently on 9 April and again today! This can be found here.
This article summarises key recent changes and clarifications, together with some outstanding questions about furlough.
CHANGES AND CLARIFICATIONS
New qualifying date for the CJRS… and other dates
The most fundamental change in today’s guidance is that the qualifying date (when the employee must have been on the employer's payroll) has changed from 28 February to 19 March 2020. In addition, in order to “be on” an employer’s payroll, the employer must have notified the employee to HMRC on an RTI submission on or before 19 March 2020. This is a new requirement.
In turn, an “eligible” employer must have created and started a PAYE payroll scheme on or before 19 March 2020.
Clearly, this brings into scope a large number of people who previously fell outside the scheme and may mean that you need/want to revisit those you furloughed (or did not furlough).
Although most of the dates in the government guidance have changed from 28 February to 19 March 2020, there are a couple of anomalies (which may be deliberate or may just have been missed!). For example:
- You can furlough employees who went on unpaid leave after 28 February 2020. (If an employee went on unpaid leave on or before 28 February, you cannot furlough them until the date on which it was agreed they would return from unpaid leave.)
- You can rehire, place on furlough and then reclaim the wages of:
- any employee who was on your payroll as at 28 February 2020 (i.e. they had been notified to HMRC on an RTI submission on or before 28 February 2020); and
- who was made redundant or stopped working for you after 28 February 2020,
even if you do not re-employ them until after 19 March 2020.
Clear as mud!
Making a claim
Today’s guidance provides a more comprehensive list of the information you will need to submit when making a claim.
We also now know that the portal should be open on 20 April 2020 with the first payments being made around 30 April 2020- in theory!
Furlough and sickness
Guidance last week clarified what should happen if an employee becomes sick while on furlough:
- If an employee becomes sick while on furlough, they are entitled to SSP as a minimum. It is up to their employer to decide whether to:
- keep them on furlough leave and pay; or
- move them on to sick leave and SSP.
NB If an employer moves an employee on to sick leave and pay within a 3-week furlough period, this will “break” the furlough and the employer will not be eligible for the grant for that period.
Given that the government is funding all furlough pay (assuming an employer is paying 80% up to £2,500) but employers have to pay SSP (subject to possibly reclaiming 2 weeks’ SSP), it seems unlikely that employers will choose to move employees who become ill during furlough onto sick leave/pay.
- An employer can claim back from both the CJRS and the SSP rebate schemes for the same employee but not for the same period of time (subject to satisfying the terms of both schemes). For example, if an employee is off sick on SSP for 2 weeks and then you furlough them for 3 weeks, you could claim a rebate of 2 weeks’ SSP and then the CJRS grant for 3 weeks.
Last week’s guidance also clarified that:
- If an employer wants to furlough an employee for business reasons, it can do so, even if that employee is currently off sick. (NB Short term illness/self-isolation should not be a consideration in deciding whether to furlough an employee, however.)
If you decide to furlough a “sick” employee, they should receive furlough pay, rather than sick pay.
- An employer can also furlough an employee who is off on long-term sick leave (although they are not obliged to do so).
Furlough and TUPE
Although HM Treasury confirmed on 6 April 2020 that the CJRS would apply to employers who took TUPEd employees after 28 February 2020, this was not reflected in the government guidance, so people were wary of relying on this.
Fortunately, revised guidance last week confirmed that a new employer can claim under the CJRS in respect of employees who TUPE transferred to them after 28 February 2020. NB This date has, today, changed to 19 March 2020.
Furlough and Visas
Last week’s guidance also confirmed that grants under the CJRS are not counted as “access to public funds”, so employers are able to furlough employees on all categories of visa.
Furlough and Returning from Statutory Leave
For any employees who return from statutory maternity, paternity, shared parental, adoption, sick leave or parental bereavement leave after 19 March 2020, employers should calculate their “wages” based on their gross salary, not the pay they received whilst on statutory leave.
Furlough and Working for Other Employers
Previous guidance made clear that a furloughed employee:
- cannot do any work for their employer whilst on furlough but can undertake training or do volunteer work, provided they do not provide services to or make any money for their employer; but
- can work for another employer, subject to the terms of their employment contract.
Last week’s guidance further clarified that employees cannot work for organisations that are “linked or associated” to the employer, as well as not working for the employer, when on furlough.
Furlough and Payroll Consolidation Schemes
Last week’s guidance confirmed that businesses that engaged in payroll consolidation schemes after 28 February 2020 could place employees on furlough.
NB Today’s guidance changes this date to 19 March 2020.
WHAT WE STILL DON’T KNOW….
The main area which remains unclear is the interrelation of furlough and holiday, as the government has still not issued official guidance on this, despite having 4 chances to do so! However, I summarise below the position as far as we understand it…
Do employees accrue and can they take holiday while on furlough leave?
- Employees accrue holiday, as normal, during furlough.
- Employees on furlough can still request and take their holiday in the usual way, including bank holidays (based on ACAS non-statutory guidance).
- On 8th April, HMRC Customer Support suggested that taking bank holiday will not break the furlough period.
However, until we have official guidance, we cannot guarantee that taking holiday within a three-week furlough period will not “interrupt” this and, therefore, risk the government grant. As such, it is safest to avoid an employee taking holiday within the first 3 weeks of furlough, if possible.
What should I pay for any holidays taken during furlough?
ACAS guidance is silent on how holiday should be paid. However, there have been the following contradictory tweets from @HMRCcustomersupport:
- “If an employee is on holiday or has a scheduled Bank Holiday while on furlough, they are entitled to still receive this holiday. Employers must ensure that any employee on holiday or a Bank Holiday is paid their full salary for that period of holiday”; and
- “They would be paid at furlough rate for the Bank Holidays if contracted to be paid on Bank Holidays and currently furloughed”.
Although HMRC tweets are not binding (and are, in fact, contradictory), our view is that the approach in the first bullet point is likely to be adopted. The safest approach will, therefore, be to pay employees 100% / “normal” pay for the recent bank holidays and any other taken during furlough and then adjust this in due course, if required.
In addition, whilst official guidance has not specifically confirmed that the government grant can be used towards holiday pay, we consider this is likely to be the case. If so, this will be very helpful for an employer’s finances. If not, an employer will be in no worse a position by allowing an employee to take holiday during furlough, as an employer would have to pay 100% whenever it is taken.
Can an employer make employees take holiday during furlough, e.g. to prevent them banking and using this when things return to normal and the employer needs them at work?
Under the Working Time Regulations, you can require workers to take holiday by giving them twice the period of notice as the period of holiday you want them to take.
In theory, the same principle should apply during furlough leave, and ACAS’s latest guidance suggests this is the case.
However, this has not yet been formally confirmed in government guidance and is also subject to the caveat that it is still possible that holiday could “interrupt” a period of furlough and, therefore, risk the government grant, so tread carefully.
Even if it is reasonable to require employees to take some leave during furlough (e.g. to prevent everyone carrying forward substantial amounts of holiday and then seeking to take it when normal life/business resumes and full staff levels are needed) and does not invalidate the government grant, employers should tread carefully in light of the government’s decision to allow employees to carry forward holiday which they can’t reasonably take due to COVID-19 and ACAS’s guidance on this carry forward, which suggests that people might be prevented from taking holiday due to being on furlough.
Whatever decisions you make about holiday and furlough while final guidance is awaited, keep a clear paper/audit trail of the decision, how you made this and your justification/rationale, in case employees bring claims regarding furlough and holiday further down the line.
These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.