COVID-19 EMPLOYMENT LAW UPDATE
EVERYTHING YOU NEED TO KNOW ABOUT FURLOUGH
AND THE CORONAVIRUS JOB RETENTION SCHEME PART 2
NEW GUIDANCE ISSUED
Following on from Lisa Hatch’s recent article, the government have updated their guidance on the Coronavirus (COVID-19) Job Retention scheme. In this article Lisa considers the new provisions and points of clarification in that guidance. Please note that the original article must 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 Ian Hogg. 1 Essex Court will remain open for business as usual throughout the COVID-19 Crisis.
On 4 April 2020 HMRC published updated guidance notes for employers and employees on the Coronavirus (COVID-19) Job Retention Scheme. The updated guidance has clarified a number of matters and provided new guidance in some areas. Key new points or points of clarification are set out below. The online scheme is still expected to be up and running by the end of April 2020 – one rumoured start date is 20 April 2020.
Do furlough agreements need to be recorded in writing?
Yes – the new guidance says that to be eligible for the grant employers must confirm in writing to their employee that they have been furloughed and a record must be kept for five years.
Can you be furloughed if you are employed by an individual?
Yes - the new guidance clarifies that the scheme also applies to people employed by an individual, e.g. a nanny. The new guidance also states the scheme is open to “any entity” including businesses, charities, recruitment agencies and public authorities, who had created and started a UK PAYE payroll scheme on or before 28 February 2020. The original guidance referred to “UK organisations” rather than entities.
What about employees who need to look after children or have caring responsibilities?
The new guidance says that employees who are unable to work because they
have caring responsibilities resulting from COVID-19, e.g. employees that need to look after children, can be furloughed.
What about employees who ‘stopped working for’ their employer on or after 28 February 2020?
Where an employee ‘stopped working for’ their employer on or after 28 February 2020 they can be re-employed, placed on furlough and claimed for under the scheme. This is separate from the provisions on redundancy.
What about apprentices?
The new guidance says apprentices can be furloughed in the same way as other employees and can continue to train whilst furloughed. However, the employer must pay them the Apprenticeship Minimum Wage National Living Wage or National Minimum Wage as appropriate for all the time they spend training. This means employers must cover any shortfall between the amount of wages claimed under the scheme an their appropriate minimum wage.
What about employees on fixed term contracts?
The new guidance says that employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. However, where a fixed term employee’s contract ends because it is not extended or renewed, employers will not be able to claim a grant for them.
What about foreign nationals?
The new guidance say that foreign nationals are eligible to be furloughed.
Can you roll employees on and off furlough, i.e. can employees be furloughed multiple times?
Yes according to the new guidance, provided they must be furloughed for a minimum period of 3 consecutive weeks. When they return to work they must be taken off furlough but they can be furloughed multiple times, provided each separate instance is for a minimum period of 3 consecutive weeks.
What about individuals who are not employees?
Grants can be claimed under the scheme for the following individuals, who are not necessarily employees in employment law, if they are paid via PAYE:
• Office holders, including company directors
• Salaried members of LLPs
• Agency workers, including those employed by umbrella companies
• Limb (b) workers.
There is new guidance on each of these individual categories.
What can company directors do whilst on furlough?
The new guidance has clarified that company directors can continue to carry out their statutory obligations whilst on furlough, provided they do no more than reasonably necessary for that purpose e.g. they should not carry out work of a kind they would do in normal circumstances to generate commercial revenues or provide services to or on behalf of a company. This also applies to salaried individuals who are directors of their own personal service company.
Can employers claim for past overtime, fees, commission, bonuses and non-cash payments?
Yes and No. The new guidance says that employers can claim for any regular payments they are obliged to pay their employees, including wages, past overtime, fees (previously excluded under the original guidance) and compulsory commission payments, but excluding discretionary bonus (including tips) and commission payments and non-cash payments.
Are benefits in kind and salary sacrifice schemes covered under the scheme?
No. The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Benefits provided through salary sacrifice schemes, including pension contributions, that reduce an employee’s taxable pay should also not be included in the reference salary. Where an employee provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the scheme. HMRC clarifies that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
Can furloughed employees work for another employer whilst furloughed?
Yes according to the new guidance, as long as it is allowed under their contracts of employment.
Where can I find more information online?
The updated guidance (updated 4 April 2020) can be found online:
- for employees and
- for employers.
What remains unclear?
There are a number of issues that remain unclear including rights to holiday pay, and sickness absence and pay, and TUPE transfers after 28 February 2020. Further guidance will no doubt follow and we will strive to keep you up to date on all key developments as they unfold. In the meantime, please do not hesitate to contact Lisa Hatch or chambers with any queries you may have about this or any other employment-related aspect of Covid-19.
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