April 7, 2020

New Guidance on Job Retention Scheme leaves key questions unanswered (again)

Coronavirus and social care

Eligibility of those in receipt of public funding

Unfortunately, there is no further clarification on whether care providers in receipt of public funding are eligible to claim under the Scheme (see our earlier update here).

If you wish to furlough staff you should consider and document why you think you are eligible under the current guidance (for example because you have a mix of private and public funding) and evidence how your claim is not an abuse of the Scheme (i.e. you won’t receive an unjustified financial windfall).

An example of an unjustified financial windfall could be where the public purse funds 100% of staffing costs, and a provider furloughs staff and recovers an additional 80% of wages in circumstances where they have not utilised the original public funding because staff have been furloughed. The Government will not permit this sort of double recovery.

Is redundancy/lay off a pre-condition of furlough?

Unfortunately, the Government has still not clarified whether redundancy / lay off is precondition of being eligible to furlough under the Scheme. Its guidance is unclear and open to various interpretations.

   The new employer guidance says:

"If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees…

[The Scheme is] designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus."

There is no express mention of redundancy or lay off, which might suggest that it is not a pre-condition of staff being furloughed, as long as the employer’s operations are “severely affected” by COVID-19. An alternative interpretation is that the stated purpose of the Scheme of helping businesses “retain their employees” indicates the need for a redundancy/lay off situation.

The government's www.businesssupport.gov.uk site refers to "those that would otherwise have been laid off" and states that the purpose of the Scheme is to “safeguard workers from being redundant”.

   The new employee guidance 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). This is known as being ‘on furlough’.”

   The new guidance for shielding employees says:

“You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant”.

This appears to represent a notable departure from the earlier guidance which simply said that shielding employees could be furloughed. If redundancy is a requirement, this would prevent most employees who have been advised to shield but who also carry out frontline care roles from being eligible under the Scheme. Few providers have a reduced requirement for care staff; the opposite is true.

Ultimately, the position is currently unclear and we will have to wait for more detailed guidance and legislation. This is unfortunate because the uncertainty is thwarting your ability to take proactive steps to manage your workforce with confidence.

Alternative employment –  a recruitment lifeline?

The new guidance confirms that employees can start a new job when furloughed (subject to the terms of their employment contract) without it affecting their entitlement to 80% of pay under the Scheme. This was not prohibited under the previous guidance but has now been confirmed.

This provides a significant opportunity for you to boost staffing numbers to tackle Covid-19 from sectors such as retail, hospitality, leisure, logistics and transport where high numbers of staff have been furloughed.

Furloughed staff cannot do any work for you or another “linked or associated” company.

Notification in writing

You must notify employees of their furlough status in writing and keep a record of the written notification for 5 years. If you need help with letters furloughing staff, please get in touch.

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