Posted by David Israel, Partner
Contributing authors: John Nevin
The latest guidance on the Coronavirus Job Retention Scheme
According to analysis by the Resolution Foundation, the Coronavirus Job Retention Scheme may see nearly a fifth of smaller firms furlough all their staff and 50% of companies put most of their staff into the scheme.
As UK employers make and execute their plans, having a crystal clear understanding of the Coronavirus Job Retention Scheme is number one priority for most employers this month.
The Government has been under pressure to provide clarity on issues not expressly covered in its initial guidance. Its most recent clarification, published on 4 April, addressed a few questions commonly asked by employers.
Can furloughed employees work for other employers?
The guidance confirms that workers who have been furloughed can work for other organisations, subject to any restrictions in their employment contracts, without adversely affecting their entitlement to 80% of pay while furloughed by their primary employer. This was not prohibited under previous guidance but has now been expressly confirmed.
This provides a significant opportunity for furloughed staff (either on a paid or unpaid basis) to help businesses and organisations that need staff to survive the coronavirus crisis or to replace staff who are off work because they or their family members are in vulnerable groups.
We can see this confirmation from the Government being particularly helpful to the retail distribution, care, and agricultural sectors
Can employees who left be re-hired and furloughed?
The guidance follows the statement made by the Chancellor on Friday 3 April: if an employee has left your employment on or after 28 February for whatever reason (and not solely redundancy as per the previous guidance), you can, if you choose to do so, re-hire them and immediately furlough them under the scheme. This measure is aimed at protecting workers ‘caught’ between jobs, whose job may have been withdrawn or deferred and who are not eligible for furlough with their new employer.
Can those unable to work due to childcare responsibilities be furloughed?
The new guidance also confirms that you can furlough those who are unable to work because they have childcare responsibilities (due to the closures of schools for example) or because they are shielding in line with public health, or need to stay at home with someone who is shielding.
You can also furlough apprentices, who may continue with the training element of their apprenticeship during furlough as long as the time spent training is paid at the minimum wage.
Can you furlough company directors?
The Scheme also applies to individuals who are paid through PAYE but who may not be considered employees in the traditional sense. This group includes salaried company directors who may continue to fulfil their statutory duties, but only insofar as necessary, and salaried LLP members. To furlough directors and LLP members, you may need a formal board decision or decision by the LLP
Can you claim for compulsory payments to employees?
The latest guidance confirms that you can claim for regular payments that you are obliged to pay employees, such as past overtime and compulsory commission payments.
However, you should not include the cost of benefits, whether or not through salary sacrifice schemes, in the reference salary that forms the basis for furlough pay. Where you continue to provide benefits to furloughed employees, this should be in addition to the salary paid under the Scheme.
Do employees accrue holiday while furloughed?
While this issue was not expressly addressed in the Government’s guidance published on 4 April, Acas has stated that employees accrue holiday during furlough.
On 7 April, HMRC indicated in its Twitter feed that employees who take holiday during furlough must be paid their ordinary full time salary in respect of this.
Whilst this is welcome clarification, we are still awaiting official government guidance on this point.
Please note that this article is correct as of 12pm on 9 April 2020.
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