We now have the benefit of a further update on the Furlough Scheme, which continues the process of filling in some of the gaps in the operation of the Scheme. Our latest guidance note explains what has changed.
The UK Government’s latest update for the Furlough Scheme follows hot on the heels of its previous guidance. The updated guidance, published on 9 April, just ahead of the Easter weekend, does clarify some areas of operation but leaves other questions unanswered.
The biggest change is that it is now possible to put someone who is on sick leave or who is self-isolating in line with medical guidelines onto the Furlough Scheme. This is a reversal of the previous approach but a welcome one. The Guidance Note says that short term illness or self-isolation should not by itself be a reason for furloughing employees, but that if there are underlying business reasons for furloughing employees, then such staff are not excluded from the furlough process. Employees who are absent with long term ill health and those who are shielding can also be put on the scheme. The update implicitly accepts that such staff will be put onto the Scheme as it makes no suggestion that there has to be an underlying business reason for furloughing them.
Employees who are furloughed whilst sick or self-isolating would no longer qualify for statutory sick pay but their rate of pay will have to match the level it would have been for statutory sick pay purposes. This is currently set at £95.85 per week. Employers are able to claim two weeks of SSP payments back for periods of Coronavirus illness starting after 13 March 2020, but this only applies to employers with fewer than 250 employees as at 28 February 2020. Naturally an employee cannot be on both furlough leave and sick leave at the same time. We anticipate that most employers will want to put sick employees onto furlough if at all possible. The key point to bear in mind is that furlough must last at least 3 weeks. Where an employer has some employees who are working either at the employer’s location or at home, it may be that the employer decides that they will not be furloughed at the current time but will continue to work. If they become sick, they will remain covered by the usual rules on sickness absence unless and until they are furloughed.
The Guidance Note recognises too that some employees may fall ill after being furloughed. According to the updated guidance the employer can choose whether to transfer them to sick pay or keep them on furlough.
The guidance in relation to employees who are shielding in line with public health guidance, is that they can be put on to the Furlough Scheme. The same applies if they need to stay home with someone else who is shielding. The Guidance Note has dropped the previous requirement that an employer could only put shielding employees on furlough if they would otherwise be made redundant. Although we thought that this statement was misleading, and did not mean that the test for shielded employees was stricter than for other employees, it is helpful that the guidance on this point has been clarified.
We now have confirmation that employees can transfer under a TUPE transfer post 28 February 2020 and this will not be viewed as starting new employment for the purposes of the Furlough Scheme. The fear was that such a transfer would render it impossible to furlough any employees who transferred post 28 February 2020 as they would not be on the new employer’s PAYE scheme as at 28 February (a condition of the Furlough Scheme). Whilst it always seemed an odd gap in the Furlough Scheme it is helpful to have the point put beyond any doubt now. Similarly transferring employees onto a new consolidated payroll arrangement (e.g. where group companies have multiple PAYE schemes and consolidate them into one) will not take them outside of the scope of the Furlough Scheme.
The rules on what work or volunteering can be done by furloughed employees has been slightly tightened up. It is now clear that furloughed staff cannot do volunteering work for an organisation linked or associated with the employer. Presumably this would not prevent (say) services being provided to an independent charity that had been adopted by the employer as one of its charities, and the Note is focussing more on charitable operations set up by the employer, or (in the case of employers who are charities) volunteering on their front line activities. The same prohibition remains on any activities that provide services to, or generate revenue for, the employer.
The information to be provided by the employer when claiming for the grant has been updated. The employer will also have to provide the National Insurance numbers and names of the employees plus their payroll/works number together with Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration number.
Two further thoughts arising from the Guidance Note in its current form. There is a debate between commentators on whether or not employees have to grant their consent to be furloughed or whether the employer can do this unilaterally if there are no other changes being implemented at the same time (and in particular no pay cuts are being introduced alongside furloughing of staff). We know that various unions are insisting that it is necessary to get employee consent.
There is at first glance a difference between the Guidance Note addressed to employees, and the main guidance on the Scheme, which is the Guidance Note that was updated on 9 April.
The COVID-19 Guidance for employees (last updated on 7 April) says “If you and your employer both agree, your employer might be able to keep you on the payroll if they’re unable to operate or have no work for you to do because of Coronavirus (COVID-19).” The updated Guidance note issued on 9 April continues to state “Employers should discuss with their staff and make any changes to the employment contract by agreement”. Neither of them specify that employee consent is needed. It could easily have provided that evidence of employee consent had to be obtained and be available for inspection. There is no such requirement.
Our view is that any apparent differences are readily explained. The note to employees is simply making the point that an employee and employer can agree to put the individual on furlough. The employee can chose to leave of course, so to that extent their consent is needed to the individual remaining employed at all. But the 9 April update is more telling when it says that employers should “make any changes to the employment contract by agreement”. This choice of words is noteworthy because it does not assume that there will be changes to the contract. Additionally the language of the updated Guidance Note provides some support for this view. The Guidance Note, in talking about employees who are sick, states “Employers are also entitled to furlough employees who are being shielded or off on long term sick leave. It is up to employers to decide whether to furlough these employees”. This is hardly the language of consent.
Secondly the updated Guidance Note moves further away from any suggestion that the employees must be at risk of redundancy before they can be furloughed. We mentioned above the removal of the only explicit wording about this from the previous Guidance Note, which was in relation to shielded employees. So the best evidence in favour of the argument that there had to be a redundancy situation has dropped away. Now, with the recognition that long term sick employees can be furloughed too, with employers having a right to furlough employees who are on long term sick leave or shielding, there is clearly no reason to assume such employees might be at risk of redundancy but for the Furlough Scheme. Indeed one of the new additions to the Guidance Note refers to the employer looking to furlough employees who are sick for short term. Whilst the short term illness should not be a consideration in whether to furlough an employee, the Note provides “if employers want to furlough employees for business reasons…they are eligible to do so…”. “Business reasons” is about as broad a test as one can imagine.
And finally, the dog that did not bark. Despite the fact that it was issued on the last day before the Easter weekend, with public holidays and potentially contractual holidays being taken by many staff you will search in vain for the Government’s guidance to employers on whether or not they can make people take holiday on furlough and what rate is to be paid. In fairness this might be because it is not really an issue for the Furlough Scheme, strictly speaking. Given that there is no implementing legislation for the Furlough Scheme the scheme itself is about how the Government will dispense public money to potential recipients. It is not amending prior statutory employment rights in the Guidance Note. Unless the Government were to be pushed to say that it is a condition of claiming the grant that staff on holiday have been paid in full, or that they have consented to take any holiday, this remains an issue to be determined under the existing law, and not the Furlough Scheme. Equally if the Government were to come out and say that it is fine to pay employees who are being furloughed on less than full pay, at the same lower rate if they take any holiday during the furlough period, then it would bind no one and the tribunals would still have to determine any claims that come in, by reference to the existing law. Put like that the Government’s reluctance to get off the fence is understandable. However there is no doubt that guidance would be appreciated by employers and employees because it is probably the biggest outstanding point, and it affects many employees. We hear guidance is going to be forthcoming at some point, so it probably pays to keep an eye on social media as a number of the points in the Guidance Note were originally trailed as responses from the HMRC COVID-19 helpline.