COVID19 Employment Law Update #5
EVERYTHING YOU NEED TO KNOW ABOUT FURLOUGH
AND THE CORONAVIRUS JOB RETENTION SCHEME
ONLINE PORTAL OPENS ON MONDAY 20 APRIL 2020
& FURTHER AMENDMENTS TO THE SCHEME
Guidance on the Coronavirus (COVID-19) Job Retention scheme is fast changing. The government have altered their guidance several times over the last week, most recently on Friday evening. Lisa Hatch highlights the key changes below. Please note that her earlier two articles should now be read in light of the updated guidance.
The 1 Essex Court employment team are currently providing advice and assistance to employers across a broad range of businesses on the furlough scheme and all employment law related aspects of the Covid-19 crisis. If you would like any further information or advice on this or any matter please contact our clerks on 0207 936 3030 or email@example.com .
1 Essex Court will remain open for business as usual throughout the COVID-19 Crisis.
What’s changed over the past week?
The online portal for claims will now open on Monday 20 April 2020 (no website address is currently available at the time of writing).
HMRC’s emails to businesses indicate that claims will be paid within 6 working days.
The scheme is now open for 4 months from 1 March 2020 (i.e. it has been extended by 1 month).
There will be an online portal to report suspected fraudulent claims.
The new qualifying date by which employers must have created a started a PAYE payroll scheme is 19 March 2020 (previously 28 February 2020).
Employers can only claim for furloughed employees who were on their PAYE payroll on or before 19 March 2020 and which were notified to HMRC on an RTI (Real Time Information) submission on or before that date.
New provisions on annual leave and holiday pay are set out in the employee’s guidance (although not yet in the employer’s guidance for some reason):
Employees on furlough will continue to accrue annual leave as per the terms of their contract of employment.
Employees can take holiday whilst on furlough.
Employers should pay furloughed employees usual holiday pay in accordance with the Working Time Regulations 1998 whilst they are on furlough.
Employers will be obliged to pay the additional amounts over the grant under the scheme, but they will have the flexibility to restrict when annual leave can be taken if there is a business need. This is said to apply during furlough and the ‘recovery period’.
If employees usually work bank holidays, the employer can agree that this is included in the grant payment.
If employees usually take bank holidays as leave, then the employer would either have to top up their pay to their usual holiday pay or give them a day of holiday in lieu.
The policy on holiday pay is apparently being kept ‘under review’.
Employees who were employed, on payroll and notified to HMRC on an RTI submission on or before 28 February 2020 and who were made redundant or stopped working for the employer prior to 19 March 2020, qualify for the scheme if their employer re-employs them and puts them on furlough.
Multiple employers: the guidance says that if an employee has had multiple employers over the past year, has only worked for one of them at any one time, and is being furloughed by their current employer, their former employer should not re-employ them, put them on furlough and claim for their wages through the scheme.
Unpaid leave: If an employee started unpaid leave after 28 February 2020, an employer can put them on furlough instead, in which case the employer should pay them at least 80% of their regular wages. If the employee went on unpaid leave before 28 February 2020, employers cannot furlough them until the date on which it was agreed they would return from unpaid leave.
The guidance states that company directors on furlough may only carry out duties to fulfill their statutory obligations. This applies to salaried individuals who are directors of their own personal service company. Directors should not do the kind of work that in normal circumstances would generate commercial revenue or provide services to or on behalf of a company. A Treasury direction to HMRC on 15 April 2020 has suggested (para 6.6) that the scope of permitted work is extremely narrow and is restricted to:
work undertaken to fulfill a duty or other obligation arising by or under an Act of Parliament relating to the filing of company accounts or provision of other information relating to the administration of the director’s company.
Where a TUPE transfer take place after 19 March 2020, the new employer is eligible to apply under the scheme.
Where can I find more information?
There is updated guidance (last updated 17 April 2020) from HMRC available online:
There is also an HMRC step by step guide for employers which was published on Friday.
The Treasury direction to HMRC dated 15 April 2020 is also available online.