As an employer, it’s vital to stay up to date with the amendments being made to the Job Retention Scheme. Our employment law experts have provided a break down of the key points from the recently revised Government guidance.
The online portal through which employers can submit claims to HMRC to reimburse their staff costs through the Coronavirus Job Retention Scheme (the Scheme) is now open. It is reported that it is a straightforward process but there may be issues with accessing the portal due to the high number of claims which will be submitted in the next few days.
Annual Leave and Furlough
- There was some ambiguity as to whether or not employees could take a holiday whilst on furlough leave. It has now become clear that they can. Holiday entitlement will continue to accrue as per their employment contract as normal.
- Employers will pay holiday pay at the employee’s normal rate of pay, or where the rate of pay varies, calculated on the basis of the average pay the employee received in the previous 52 working weeks for holidays taken whilst on furlough
- This means that employers will have to top up pay to 100% of employees are taking annual leave whilst on furlough leave if their pay was adjusted to 80%.
- Employers will, however, have the flexibility to restrict when leave can be taken
Previously, only employees who were on an employer’s payroll on 28 February 2020 were eligible to be furloughed. Now, employees who were employed on 19 March 2020 are eligible for furlough, provided that their employer had submitted real-time information payroll data by that date to HMRC.
- Originally, the Scheme was to end at the end of May. However, in light of the Government now extending the “lock-down” for a further three weeks, the Scheme has also been extended until the end of June 2020.
- An additional reason for the extension was to give employers more time to undertake collective redundancy consultations if they plan to make large scale redundancies after the Scheme had ended.
There must be a written agreement
Originally, employers only had to notify their employees that they were going to be furloughed. The HMRC has now made clear however that simply notifying employees is not enough. Employees must agree in writing to being placed on furlough leave. They must also agree in writing that they will not undertake any work for their employer whilst furloughed.
It was unclear as to whether a director could be furloughed, and if so, whether or not they could undertake their director duties whilst on furlough leave, for example, filing company records at Companies House. It is now clear however that a director can be furloughed (if he/she is also an employee) and once furloughed, he/she can only undertake work to fulfil a duty or other obligation arising from an Act of Parliament. These include the filing of the company’s accounts or provision of other information relating to the administration of the director’s company. This is a very narrow interpretation of the directors’ duties.
- HMRC has said that employees do not qualify for SSP if they are on furlough leave – this means that they cannot be on two types of leave at the same time and therefore, albeit ill, remain furloughed;
- The SSP Regulations have been amended to include the ‘extremely vulnerable’ as being eligible for SSP.
- The extremely vulnerable are those that are at very high risk of severe illness from coronavirus because of an underlying health condition i.e. severe respiratory and severe heart conditions etc. and has been advised by public health guidance to follow strict shielding methods.
We’re on hand to support your business during these unprecedented times. If you require further advice on any of the above or your current furlough arrangements please get in touch with a member of the team.