Coronavirus Job Retention Scheme (Furlough Leave) and related issues

1. HMRC revealed on 8 April the timing for repayments of furlough pay to employers

a. more detailed HMRC guidance on how to make a claim is likely to be published in week commencing 13 April

b. the portal for employers will open on 20 April

c. first payments are expected to be made on 30 April

d. employers can claim 14 days ahead – this therefore suggests that from 20 April onwards employers can claim for the whole of March (if employees were furloughed from the start of the month) and April

2. HMRC claim that their system is capable of processing 450,000 claims per hour.

3. HMRC is alive to fraudulent claims. All furlough documents must be kept for 5 years. There will be a hotline for employees on furlough who are asked to work to report their employers.

4. The original guidance for employees whose pay varies stated that overtime and commission was excluded and seemed to suggest that employers should apply basic pay only. The updated guidance published on 4 April has created further uncertainties. Factors such as London weighting and “regular payments you are obliged to pay your employees” are included, but the situation regarding overtime and the commission is unclear and each individual employment contract needs to be considered. Hopefully this will be clarified by forthcoming guidance. 

5. Holiday whilst on furlough leave is mentioned in neither the original nor the updated guidance. Opinion among employment lawyers varies. In the last few days a consensus has emerged that employees can take holiday simultaneous with furlough leave and this will not interrupt furlough leave. This is potentially an important point because otherwise a period of holiday may have broken the furlough leave into periods of less than 3 weeks, meaning that the employer could not reclaim salary.

6. Employees are entitled to full pay during holiday. It seems that the Government will reimburse holiday pay at the normal 80%, so employers will have to top up the 20%.

7. From an economic point of view it makes sense for employers to require employees to take holiday during furlough leave, to avoid large amounts of accrued holiday being available to employees once the crisis is over. Employers can require employees to take holiday by giving them a notice double the length of the period of holiday to be taken. For example, 2 weeks’ notice of a 1 week holiday. So this can be overlaid on a furlough leave period.

8. Whilst this makes economic sense for the employer, from an employee relations point of view it is not a particularly friendly thing to do; requiring employees to take “holiday” when the lockdown applies and they are unable to enjoy proper holiday time. Nonetheless, employers can do this if they wish.

9. Holiday accrues during furlough leave.

10. The Furlough scheme is due to run until 31 May meaning there will be 4 bank holidays during this time (10 April, 13 April, 8 May and 25 May). As with other holiday entitlement, the employer can agree that these bank holidays count as 4 days of employees’ holiday entitlement, but remember that payment has to be topped up to 100% for any period that counts as part of the employees’ annual holiday entitlement. 

11. Logistically it may be easier for employers not to treat the 4 bank holidays as part of holiday entitlement, and instead to agree that a complete week in April or May counts as 5 days’ leave, meaning that there is just one calculation for a complete week’s leave rather than 4 separate calculations for the bank holidays.

12. Employees who stopped working for you on or after 28 February 2020 (for any reason including redundancy and even resignation) can be reinstated and retrospectively put on furlough leave from 1 March.

13. It is possible that the furlough scheme will be extended beyond the current end date of 31 May.

14. Employees can go on, off and back onto furlough leave. So employers can rotate staff. The minimum furlough leave period to obtain a refund is 3 weeks, but if the employer has an unexpected and urgent need for staff, furlough leave can be shorter, but pay would not be refunded.

15. Where employees cannot work from home and the workplace is functioning but employees are reluctant to attend work because they have health concerns (assuming they’re not one of the 1.5m people in the “extremely vulnerable” category) the employer can point out that if the employee fails to perform work the employer does not need to pay salary. This, coupled with reassurance about workplace hygiene, may encourage employees to attend work.

16. In normal times refusal to attend work and to perform the employment contract could be seen as a failure to comply with a reasonable management instruction. However, against the background of the virus, employers need to exercise caution in considering escalating the situation to disciplinary. Employees must not be subject to a detriment if they act in a certain way as a result of health and safety concerns. Detriment would include a disciplinary sanction. It is automatically unfair to dismiss for a health and safety related reason.

17. Refusing to pay someone on the grounds that they feel unable to attend work because of concerns about the virus might seem harsh – particularly if their concerns arise because they themselves or someone living in their household is at increased risk because of their age or a medical condition (but who falls short of the “extremely vulnerable” category). Where possible, you could agree to furlough such people. However, this can be a dangerous precedent to set – as you may end up with lots of employees pleading special circumstances, which could leave you short-staffed.

18. If an employer considers that there will be insufficient work at the end of the furlough leave period it is possible to conduct redundancy consultation with employees on furlough leave. Social distancing rules will apply so this would need to be done by telephone or virtual meeting. Normal employment law rules apply so employers have to conduct meaningful consultation.

19. If there will be 20 or more redundancies at one location within a period of 90 days then the rules of collective redundancy consultation apply. The employer must either organise the election of representatives or enter into consultation with an existing trade union.

20. Employees on furlough leave must not provide any services to the organisation that furloughed them. Representatives elected for the purposes of collective consultation are arguably providing a service to the employer and therefore the employer may not be able to reclaim pay under the government scheme in a period in which a furloughed employee carries out their duties as a representative.

21. Employers which acquired employees by way of a TUPE transfer in the course of March have been in an uncertain position. Those employees were not on their payroll on 28 February and therefore appear not to be eligible for the furlough scheme, despite the fact that they have carried forward their continuity of employment with their previous employer. It seems that this point is under review and an email from HM Treasury dated 6 April 2020 suggests that employees who transferred by way of TUPE in March will be eligible for the scheme. It therefore appears that updated guidance will be published shortly.

Note 1: The information given in this Factsheet document is by nature generic and there are a great number of uncertainties and challenges in the current situation. Individual advice in each situation is required before action is taken and Sherrards accepts no liability for any action or inaction taken on the basis of this document only.

Note 2: The information given in this document is based on the legal position as at 9th April 2020. Further emergency employment legislation could change, possibly very significantly, the current legal position.