Hello my name’s Paul Griffin and I’m Head of the Norton Rose Fulbright Employment Team in London. Last week, I discussed the Government’s Coronavirus Job Retention Scheme. On 4th April the Government published some updates to their guidance on that scheme for both employers and employees, and so today, I thought it would be useful for me to clarify some of those points for you.
Which employees are eligible under the scheme?
I mentioned last week that an employee must have been on the payroll of the employer on or before 28 February, but that if an employee had been made redundant since that date they can be rehired and placed on furlough. The guidance has now made it clear that this re-engagement applies to any person who ceased working after 28 February for any reason, not just redundancy. So, for example, if an employee left to start a new job after 28 February they could ask the previous employer to re-employ them so that they can be furloughed. They would not be entitled to be furloughed by the new employer as they wouldn’t be on that employer’s PAYE payroll as at 28 February and therefore will fall through the cracks.
The guidance has also been amended to clarify that employees who are required to stay at home with someone else who is shielding, as well as those who are themselves shielding in line with public health guidance, can be placed on furlough. Interestingly, in both cases it states that they will only be covered by the Job Retention Scheme where they are unable to work from home and they would otherwise have been made redundant.
Employees with caring responsibilities as a result of coronavirus are also clearly referred to in the guidance, which is helpful as employees with childcare responsibilities may wish to volunteer to be furloughed to help them manage the work and caring responsibilities.
Employees who are receiving statutory sick pay whilst self-isolating in accordance with the extension of the Statutory Sick Pay regulations cannot be furloughed, but can be furloughed once their isolation period is over.
With regard to Directors and salaried members of Limited Liability Partnerships , as long as these individuals are on the PAYE payroll then they can be placed on furlough. For directors any such decision must be taken by the board, formally adopted and noted in the company records and communicated to the relevant director in writing. An additional issue regarding directors is what work they can carry out. They can carry out their statutory obligations under the Companies Act 2006, such as filing accounts or attending the AGM, but they must do no more than is reasonably necessary for that purpose.
The guidance now also provides additional guidance on apprentices, employees on fixed term contracts, and employees employed by individuals, such as nannies. It clarifies that alll of these can be furloughed as long as they were on a PAYE payroll.
Working during furlough
As I mentioned last week, while an employee is on furlough they can’t be carrying out any work for that employer. However, if someone has more than one employer they can be furloughed separately by each one and the cap which applies will apply separately for each employer.
There have been a lot of questions asked in the media as to whether the employee can work for someone else whilst on furlough. Well the answer to that appears to be yes. As long as the contract of employment allows, an employee can be furloughed in one job and receive a furloughed payment, but continue working for another employer and receive their normal wages.
Employees can also carry out volunteering work whilst on furlough and indeed the guidance states that the organisation can agree to “find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.” The important point is that the employee will need to be able to return to work for the employer if the employer decides to stop furloughing them.
What level of salary can the employer claim for?
The original guidance stated that the grant applied for by the employer was to cover 80 per cent of an employee’s salary as of 28 February 2020, up to £2,500 per month. It stated that fees, commission and bonus were expressly excluded. The new guidance has clarified which regular payments an employer can for and so which it is obliged to pay the employee. This includes wages, past overtime, fees and compulsory commission payments”. Discretionary bonuses, tips and commission payments and benefits in kind are excluded from the calculation. This means that an employee who is contractually entitled to commission payments or guaranteed overtime should have these included in the 80 percent, subject to the maximum.
With regard to salary sacrifice – it is the post salary sacrifice wages as of 28 February that should be used. However HMRC has agreed in the guidance that COVID-19 counts as a life event that would warrant changes to a salary sacrifice arrangement. Therefore, the employer and employee could agree to amend the relevant contract to change any salary sacrifice arrangement and this must be agreed between them.
Placing an employee on furlough
The new guidance stipulates that the employers should write to the their employees confirming that they have been furloughed. It does also clarify that employees can be furloughed multiple times, meaning that they can be rotated on and off furlough as long as they are on furlough for a minimum period of three consecutive weeks. An additional piece of information included in the guidance is that the employer should keep a copy of the agreement placing the employee on furlough for a period of up to five years.
The Governments guidance still does not give clear guidance in respect of certain areas in relation to the scheme, for example in relation to annual leave. Acas Coronavirus guidance for employers and employees has a section on using holiday. It states that if an employee is furloughed they can still request to take their holiday in the usual way, including taking bank holidays.
In order to deal with the issue of holiday, the Government introduced temporary changes to the Working Time Regulations so that an employee who was unable to take holiday due to the coronavirus in the correct holiday year (for example, because they were sick, on furlough or a key worker and so can’t take any time off) can carry over up to four week’s paid holiday over a two-year period.
The Acas guidance also suggests that employees may be required to use a paid holiday for the bank holidays including where they are furloughed. That is useful to know with various bank holidays coming up. The Acas guidance also suggests that employees should be entitled to full pay when they are on holiday.
However, the government guidance on the Job Retention Scheme doesn’t mention this point, nor does it make it clear whether the employer is able to recover any payment under the Scheme for this.
As I have mentioned there are still some areas which remain unclear, such as in relation to annual leave. It is anticipated, and indeed hoped for by us as advisers, that the guidance will be continually kept under review as employers and employees continue to ask more questions about its operation.
As ever if you would like any more information on this then please contact me or one of the team at Norton Rose Fulbright. I will be producing further videos on this topic and just want to wish you all well and stay safe. Thank you.