Furlough Leave - updated news and guidance
- AuthorReyhana Koser
COVID-19 – An update on Furlough Leave
Since our last article on the Coronavirus Job Retention Scheme (Furlough Leave) the Government has published a number of updates to the guidance. These updates have clarified a few areas of uncertainty that have arisen and introduces a new requirement.
The updated guidance still does not answer all questions that have been raised but it does give more clarity on salary sacrifice, which types of employees can be claimed for (e.g. Company Directors), which payments can be included and whether furloughed employees can work for another employer during Furlough Leave.
Unfortunately, the updated guidance still remains silent on the tricky issue of whether employees can be placed on Furlough Leave and take holiday at the same time.
However, despite the above area of uncertainty the updated guidance:-
- Confirms employees who were employed on 19 March 2020 (previously 28 February 2020) are eligible for Furlough Leave, provided the employer had submitted real time information payroll data to the HMRC by that date.
- Confirms the Job Retention Scheme is not limited to those employees who would otherwise be made redundant. Employers can claim under the Job Retention Scheme if they cannot maintain their current workforce because their operations have been severely affected by COVID-19.
- Confirms employees can start working for a new employer (providing their contract of employment provides for this) whilst on Furlough Leave. As such, they can in theory be paid up to 80% of their earnings under the Job Retention Scheme while working for (and presumably being paid) by a new employer.
- Clarifies what employers can claim back from HMRC (subject to the £2,500 cap). The guidance now says that employers can claim 80% of the employee’s salary and this can include any regular payments employers are obliged to pay: "wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded”.
Compulsory in this context presumably means contractual. Remember, employers can also claim for the minimum automatic enrolment employer pension contributions on the subsidised wage as well as their National Insurance contributions.
- Clarifies the fact that Company Directors can be placed on Furlough Leave. However, where furloughed Directors need to carry out particular duties to fulfil the Statutory Obligations they owe to their Company, they may do so provided they do no more than would reasonably be judged necessary for that purpose.
- Clarifies that the Job Retention Scheme can also be claimed for the following types of workers provided that they are paid via PAYE and are not doing any work:
a) Salaried members of LLPs;
b) ‘Limb b’ workers; and
c) Agency workers (including those employed by umbrella companies).
- Confirms that employees can be placed on Furlough Leave a number of times; but each period of Furlough Leave must be at least 3 weeks’ long.
- Introduces a new requirement that employers must notify their employees in writing that they have been placed on Furlough Leave. The guidance states that employers should discuss Furlough Leave with their employees and make any changes to employment contracts by agreement. They must then keep a record of that communication for 5 years.
- Confirms a new employer is eligible to claim under the Scheme in respect of the employees of a previous business transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.
- Confirms that Apprentices may be placed on Furlough Leave and may continue to train during this period provided they are paid at least the applicable statutory minimum national wage during any period of training.
Finally, it has been confirmed that the system for employers to submit their claim for this grant will be live on 20 April 2020 with payments under the Job Retention Scheme being made to employers by the end of April. The aim is for the payments to be in Employers’ bank accounts 4 to 6 days after the Claim is received via the portal.
If you require advice and assistance on the Coronavirus Job Retention Scheme (Furlough Leave) please contact Reyhana Koser in our Employment Team on 01384 445885 or email at ReyhanaKoser@Talbotslaw.co.uk.