Following our update last week around the guidance from the UK Government on the announced Coronavirus Job Retention Scheme, further clarification on some (but not all) of the grey areas has now been provided. We have set out below some of the main points of clarification.
1. Taking back old employees: Those employees who were terminated on or after 28 February 2020, whether or not for redundancy, can be re-employed and furloughed (previously the guidance only included those who were made redundant). This follows significant lobbying of the government from a group of individuals who had resigned their roles to take up new roles, only to have those new roles withdrawn at the start of the crisis.
2. Multiple jobs: During any period of furlough, we knew employees couldn’t do any work for their employer, but we now know that employees can take up employment for another unconnected employer, provided their current employer agrees to it. An employee with multiple employers can technically be furloughed by each employer simultaneously, in which case, each employment can pay the worker up to the maximum £2,500 at the same time.
3. Company directors: It is confirmed that directors of personal service companies, can be furloughed and still carry out their statutory director duties, so long as this involves no more work than reasonably necessary for that purpose. Any such arrangements should be adopted formally as a decision of the relevant company. Whilst furloughed, they must not generate commercial revenue or provide services on behalf of their company.
4. Records: The updated rules say that employers should write to their employees confirming they have been placed on furlough and that these records should be retained for five years.
5. Annual Leave: The guidance remains silent on the question of whether annual leave accrues during the furlough period, however it is the view of most that furloughed employees continue to accrue holiday in the usual way. ACAS are taking the view that you cannot take any holiday whilst on furlough, which contradicts the closest case law we have in this area, but for the moment it is probably safest not to force employees to take holiday whilst on furlough. However, we now know that those bank holidays which fall during the furlough scheme period (10 April, 13 April, 8 May and 25 May) can be considered to be taken as part of annual holiday entitlement, but it is not clear at what rate these days should be paid (at 80% or full pay). Good news at least for those who are topping up their employees’ pay whilst on furlough.
6. Should there be any threshold on losses before you can use the scheme? This update states that employers can furlough employees if they cannot maintain their current workforce. It notes that “all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus”. Speculation that the government might include some threshold in relation to level of losses before you can reclaim money under the scheme, has not come to fruition and seems unlikely to happen now.
It remains the case that HMRC has the right to retrospectively audit all claims made, with scope to claw back fraudulent or erroneous claims, but it seems unlikely that employers would be unduly penalised just for a genuine mistake arising from a lack of clarity in the scheme.