Happy New Year - our first newsletter of 2021! Throughout this year we will continue to bring you news and developments relating to the charities sector.
It is not often that new Government guidance is released on a Saturday, but, and this expression has been used countless times before, and it shows no sign of tiring; we are living in unprecedented times! This updated and amended guidance on the Coronavirus Job Retention Scheme (Furlough Leave) is a mixed blessing; there is clarity on points, confusion on others and then rather disappointing, deafening silence where guidance is desperately needed.
This ebriefing looks at some, but not all of the guidance, and is accurate and up-to-date at the date of going live – 7 April 2020.
Eligibility for furlough leave
When this scheme was first set up, it appeared to be restricted to the payment of employees who would have been made redundant in light of the impact of the Coronavirus, i.e. the job no longer existed. This now seems to have been widened out, maybe because the Government had not anticipated the full extent of the impact of the virus and lockdown or maybe it was meant to be this wide from its conception. Whatever the reason, the following has been confirmed:
- Employees can be furloughed multiple times, although each time must be for a minimum of three weeks. This is useful clarity from the Government for employers who are anxious to avoid making harsh decisions but want to spread the burden (when 80% pay) or blessing (when 100% pay) of furlough amongst their employees.
- Employees with “caring responsibilities” who cannot work because of these responsibilities can be furloughed. The responsibilities must arise out of the coronavirus crisis, and the Government uses the example of looking after children. This is extremely broad in its drafting and again seems to extend the furlough beyond those roles that are redundant. Key workers are still able to send children to school throughout the Easter holidays if necessary, so the need should only arise where the employee is not a key worker, and there is no way that they can do their work at home.
- Employees who were made redundant after 28 February 2020 or who “stopped working for you” on or after 28 February 2020 can also be placed on furlough leave. This both clarifies and extends this issue; employees who resigned for whatever reason after 28 February can be re-employed for the purposes of putting on furlough. Employers do not have to reinstate employees who have resigned for whatever reason or have been dismissed.
- Employees, whilst on furlough, can work for another employer provided there is nothing in the contract of employment that is furloughed that would prohibit this, i.e. a non-compete clause. For employees who will struggle on a 20% reduction during furlough, this may offer some relief. Obviously, employment opportunities are limited to a small number of sectors at the moment, and so the chances of employment are limited.
- Some further administrative issues are confirmed for employers:
- Employers who want to take advantage of the scheme must, as we know, have a PAYE scheme (on or before 28 February 2020) and must have enrolled for PAYE online;
- Employers must confirm in writing to employees that they are embarking on furlough leave and these records must be kept for five years. As noted in previous updates, if an employer is not topping up the 80% paid by the Government, then the employer will also need the employee’s consent. Failure to get this consent exposes the employer to an unlawful deduction of wages claim. In response, an employer could argue that if the employee does not agree, then there will be no role available, and if the employee has less than two years’ service, then the employee would not be entitled to a redundancy payment and would be without a role once lockdown is lifted, and the economy starts to recover. This time frame rather suggests that HMRC will spend some years after this crisis has passed checking through claims, so accurate and comprehensive paper trails for are key.
Employees who are shielding (in line with public health guidance)
The Government’s position on employees who are shielding has gone from one of clarity to confusion! Previous guidance notes that “employees who are shielding…can be placed on furlough”. This new guidance, however, adds that employees who are shielding (or need to stay with someone who is) can be furloughed if they are unable to work from home and “you would otherwise have to make them redundant”. This last clause appears to be contrary to the rest of the guidance, which is extending out the eligibility of furlough. This clause limits furlough for those shielding (and their carers) to redundancy situations only. At this stage, we do not know whether this was an intentional inclusion and meant to distinguish these situations from others or an oversight by the Government’s drafters who are working under pressure to write and produce guidance. Clearly, there is a risk for employers who furlough shielding employees when their roles are not redundant. The risk is an investigation by the HMRC and a demand for the wages they claimed on that employee’s behalf. This risk has to be countered against; first, the time and resources of the HMRC to investigate the circumstances around every shielded employee and second, the potential discrimination risk if the employer does not place a disabled employee who is shielded on furlough but requests they take unpaid leave. We will, of course, update on this issue if further clarity is provided.
Public funding and furlough
The Government has made it clear that it does not expect public sector organisations to use the furlough scheme as their employees will continue to work in key worker roles. However, the question arises for non-public sector employers where funding is received for staff costs. The underlying message from the Government is clear; there should be no double recovery, so an employer cannot receive monies from the public purse for the role and then for 80% of the role when it is furloughed. Where the funding is ring-fenced for specific staff costs and these roles are necessary to provide services to respond to the crisis, then these roles cannot be furloughed. In other cases, we consider it may still be possible to utilise the scheme.
Holiday whilst on furlough
Employees will continue to accrue holiday whilst on furlough; that much is clear. In addition, as noted in our previous ebriefing, employees can now carry over statutory leave for up to two years so that they do not lose it if they are unable to take it at this current time of crisis. The issue that was not addressed at all in the latest guidance relates to whether holiday can be taken whilst employees are on furlough and if it can, what payment are employees entitled to?
The Guidance gives express guidance as to employees on sick leave and those on maternity, paternity and shared parental leave but is silent as to holiday. However, it notes that employees have the “same rights at work” when on furlough, although it does not then include the right to take holiday in the list of rights beneath this sentence. Conversely, the ACAS guidance (last updated 6 April 2020) is clear and states that employees can still take their holiday whilst on furlough. Once again, faced with conflicting advice and trying to second guess what tired and overworked civil service drafters are trying to say, employers must take a view and assess the risks. If holidays are permitted, then they will need to be paid at 100% so employers will need to top up if employees are only receiving 80% of their wages. Whilst that might mean that employers avoid employees returning from furlough and wanting to take all their accrued holidays, it does run the risk of HMRC reclaiming back the payments for the time an employee took on holiday during the furlough time.
For more information
If you require further clarification, please contact Matt Wort.
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