On 30 April 2020, the Government put out another updated version of the Guidance Note (the sixth by our count). Unlike many of the previous Guidance Notes, this guidance update is relatively helpful in clarifying a few areas. However, for those who hoped to have clarity on the furlough consent question, and whether or not you can furlough an employee who is ill, we have to report that those issues still remain unchanged (and see our previous advice note on that).
The first change is to deal with Company Directors who have pay cycles which are longer than one month. Company Directors, particularly those being paid fees rather than salary, are paid quarterly or annually. The guidance now confirms that these individuals simply need to have been on an RT1 submission on or before 19 March 2020 at some point in the previous 12 months. Indeed the guidance goes further and confirms that this applies to any employee who has a payment cycle which is longer than one month. They simply need to have been paid, in accordance with that cycle, and have appeared in an RT1 submission form in the 19/20 tax year as a result.
The Government has also tightened up the circumstances in which employers can make a claim in anticipation of a payroll run. The claim being submitted to the portal can only be made "in anticipation of an imminent payroll run at the point [the Employer] run[s] their payroll or after they have run their payroll". Presumably this is to deal with employers who are trying to get ahead of the curve, and to have the monies for certain in their bank account before making the relevant payroll payments to the employee. It does mean that for some employers, particularly where cash flow is tight, there is going to be a nerve wracking few days whilst they wait to see if the furlough monies come through.
The Government has explicitly confirmed that once an individual has been put on furlough and served three weeks on furlough (so as to be eligible for the grant) any extension of that ongoing furlough can be for any period selected by the Employer. In other words, it avoids any suggestion that furlough needs to be in three week blocks, even if it is continuous. This is in line with what we understood the guidance to be saying previously but it is helpful to have this clarified explicitly.
Finally, the Guidance Note deals with employees who are working as a Union or non-Union representative whilst on furlough. This is an issue which we have touched upon previously. Given that the employee must not be generating income for the employer or providing services for the employer, the concern was that a Trade Union Representative or an employee representative carrying out duties (for example, in a collective consultation exercise), would render themselves ineligible for the Furlough Scheme. We had thought that this was unlikely be the case. We thought that employers would be able to argue that the services being carried out by an employee representative were not for the employer, but were for the benefit of the workforce, who are benefiting from the work done by the representative in question. We know that at least one large Union took the same view and had issued a statement to that effect. We now have specific guidance. HMRC recognises that employees who are Union or non-Union representatives may undertake duties of activities for the purpose of representing (whether individually or collectively) employees or other workers. This is subject to the overall requirement that the representative must not be providing services to or generating revenue for the employer.
Clearly as a general rule, it is now clear that carrying out consultative duties on behalf of individuals is generally fine. We think there will be relatively few cases where it could even be credibly argued that employee representatives or Union representatives were providing services to or generating revenue for the employer. No distinction is drawn between official Union representatives (whose salary may be paid by the employer) and unofficial representatives or elected employee representatives.
However, this aspect of the Guidance Note does raise a number of questions. First, does this shed any light on whether or not an employer can go through a consultative process with individual employees who are personally at risk of redundancy? We think it makes it easier to be confident that an employer can go through a consultative process with people who are actually being made redundant, as well as a consultation exercise with their representatives. If employee representatives, can undertake representative duties, then it would seem logical to assume that an individual can consult on their own behalf, in respect of their own role. The same logic would say that this is not providing services to the employer. Moreover we think that an individual who is offered an opportunity to make representations on their own behalf, is further away from providing services to an employer than an employee representative, who might be required by virtue of their role to attend a collective consultation meeting by the employer, to enable the employer to discharge its legal duties connected with collective consultation. Since it is clear that individuals on furlough can be made redundant, it must follow in the light of that fact, and this guidance, that individual consultation does not carry with it the likelihood that this by itself would take the individual outside the Furlough Scheme. However, if an individual is being made redundant and is required to participate in some sort of transitional handing over period, that would be a different question. We anticipate this will be less likely to happen for furloughed staff given that the employer will have, almost certainly, already furloughed that employee for a number of weeks.
There are still some unanswered questions on this aspect. What about issues where there are disciplinary or grievance hearings? Does an individual on furlough become ineligible, if they are required to attend a grievance hearing? What about witnesses who may be asked to give statements or attend (either remotely or in person) a hearing to give evidence. We think these are trickier issues. Logically, we think that an individual who is the subject of a grievance hearing or a disciplinary hearing is in the same position as one who is facing redundancy. The individual is being offered an opportunity to defend themselves. They are acting in their own interest and not in accordance with the employer's interests.
However, we think there is potentially a distinction between those individuals and individuals who are asked and/or required by an employer to give evidence, whether in the form of a witness statement or a telephone interview. In those circumstances it is much more difficult to argue that they are acting in their own interests. Instead they are acting to support the employer's interests. Therefore, if the situation arises (and we have had it for several clients) we think the first question should be whether the disciplinary issue can be deferred until the end of the furlough period for the relevant employee(s). In the circumstances we think that it is likely that a Tribunal will be sympathetic, if there is more than normal delay in processing a disciplinary hearing or grievance. If, for whatever reason, it cannot be delayed then we would suggest that the witness is called to ask whether they would be willing to assist. Assuming that they are willing to assist then a written invitation can be sent out to them inviting them to assist but making it clear they are not required to assist. Naturally if the employer has to instruct the witness to assist then that is going to be more problematic for the employer in maintaining a furlough grant application for that individual. In that case it may come down to a balance between the benefits of pushing ahead with the disciplinary action, and the benefits of maintaining a valid furlough claim.