Furloughing – changes to the Coronavirus Job Retention Scheme16 Apr 2020 // Insights
Head of Employment Helen Crossland summarises the points clarified and changed by the Treasury regarding the furloughing of employees on 15 April 2020
This article was updated on 17 April 2020.
Following the Chancellor’s original announcement on Friday 20 March 2020 regarding the Coronavirus Job Retention Scheme (explained in summary by Seddons' Head of Employment here) and updated on 6 April 2020 here), the Treasury has now further clarified the following:
- Employers can now furlough and claim for any employees who were on their payroll on or before 19 March 2020. This has changed from 28 February 2020. However, it is provided such employees had been entered on their PAYE payroll via a Real Time Information (RTI) submission by that date. It will not cover individuals who may have joined pre-19 March 2020 but who were not put on the PAYE system until later that month.
- The scheme has now been extended to run for a further month, until the end of June 2020. It is due to be operational from 20 April 2020 in terms of businesses being able to submit online claims to HMRC from this date. HMRC is expected to start repaying employers from the end of April 2020.
- In a key change to the previous guidance, employers must have agreed with employees in writing that they will cease all work in order to claim the grant. Previously, the direction had been that employees should be notified that they were not required to work.
- It has been reaffirmed that employers are not limited to only furloughing those employees who would otherwise have been made redundant. The scheme also applies to any employees who are furloughed "by reason of circumstances as a result of coronavirus or coronavirus disease". In other words, those whose ability to perform their role or whose work levels have been impacted can be furloughed and claimed for under the scheme.
- It has been clarified that employers cannot reclaim any payments which are not part of employees’ regular salary or wages, including any performance-related bonus or discretionary payments, including tips.
- Employers cannot claim for any salary which has been stated as being conditional. Hence, any payments which employers and employees have agreed will be paid subject only to the scheme paying out will not likely be recoverable.
- Employers can reclaim earnings which they reasonably expect to be paid to an employee under the scheme. This appears to include any salary an employer has deferred payment of pending reimbursement under the scheme. That said, given the bar on conditional payments, certain sums may not be claimed where they have been stated as being dependent on repayment under the scheme.
- It has been established that a director who is furloughed can only undertake very limited duties. They include the filing of company accounts and provision of other information relating to the administration of the business.
- There remains silence around annual leave. In the meantime the common view is that taking holiday when furloughed will not interrupt the period of furlough leave.
Should you have any questions regarding the above, or need any employment related legal advice, please contact Seddons’ Head of Employment, Helen Crossland, at firstname.lastname@example.org, or 020 7725 8034.
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