The Coronavirus Job Retention Scheme - Third Version of GuidancePublished on: 14 April 2020
Frustratingly, this does not include any clarification as to whether an employee can be on holiday whilst furloughed under the Scheme without “breaking” the period of furlough. We comment on this at the end of our commentary on the Scheme, which has been updated to incorporate the below points, which is accessible here.
The main areas of developments are as follows.
Previous guidance stated that employees who are off sick and are entitled to statutory sick pay (“SSP”), or who are self-isolating in circumstances where they qualify for statutory sick pay, could not be furloughed under the Scheme until the relevant absence had ended. This has changed. The updated guidance states that employees who are off sick can be furloughed just like any other employee, and if that is done, a relevant employee will no longer receive sick pay and will be treated as a furloughed employee.
The guidance also states in relation to employees who become sick whilst furloughed that they retain their statutory rights, including their right to SSP, and this means that furloughed employees who become ill must be paid at least SSP, but it is up to employers to decide whether to move these employees on to SSP or to keep them on furlough, at their furloughed rate. A qualifier to this, which the guidance does not acknowledge, is that if the employer has placed the employee on furlough by agreement, it can only switch the employee on to sickness absence if that is in accordance with the agreed terms. For example, if the employer has committed to keeping the employee on furlough until 31 May (when the Scheme is currently due to end), it will be in breach of contract if before then, without agreement, it treats the employee as being on sick leave.
The guidance states further that:-
If a furloughed employee who becomes sick is moved onto SSP, employers can no longer claim for the furloughed salary. Employers are required to pay SSP themselves, although may qualify for a rebate for up to 2 weeks of SSP. If employers keep the sick furloughed employee on the furloughed rate, they remain eligible to claim for these costs through the furloughed scheme.
Therefore, if a furloughed employee whose furlough pay is less than the level of their entitlement to SSP (£95.85 a week from 6 April, and previously £94.25 a week) falls sick, the employer must pay them not less than the equivalent of their full SSP entitlement, albeit that it is the employer’s choice as to whether to:
- end furlough and pay actual SSP (and recover this to the extent that it is able) or
- continue furlough and recover under the Scheme 80% of the amount paid.
Of course, if the employer elects to treat a period as sickness absence less than 3 full weeks after furlough commenced, it will forfeit the right to recover any payments under the Scheme in respect of that period. Similarly, employers considering their options in these circumstances who wish to place employees back on furlough after the period of sickness absence should take into account whether the renewed furlough will be able to run for at least a further 3 weeks, taking into account the end date for the Scheme.
Previous guidance stated that employees who are shielding in line with public health guidance, or who “need to stay home with someone who is shielding” can be subject to the Scheme “if they are unable to work from home and you would otherwise have to make them redundant”. It would have been surprising if an employer actually had to demonstrate that such an employee would otherwise have been made redundant in order for the entitlement to funding to arise, as that is not an express requirement for any other employee who is furloughed. Nevertheless, this caused a great deal of uncertainty.
This has been addressed, as the updated guidance states under a heading ‘Shielding Employees’ simply that:-
Employees who are unable to work because they are shielding in line with public health guidance (or need to stay home with someone who is shielding) can be furloughed.
The guidance also states elsewhere that:-
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.
It is noted that this part of the guidance goes on to state:-
If a non-furloughed employee becomes ill, needs to self-isolate or be shielded, then you might qualify for the SSP rebate scheme, enabling you to claim up to two weeks of SSP per employee.
It should be remembered, however, that employees do not qualify for SSP by virtue of shielding. Entitlement to SSP is explained here.
It has been confirmed that a transferee employer can apply the Scheme to employees who transferred to it under TUPE after 28 February – which will be subject to the proviso that they were on the transferor’s payroll on 28 February.
It has not been made clear, however, whether transferees are to have the right to access transferors’ payroll records for the purposes of determining the historic pay of furloughed employees on variable pay that is necessary to determine payments to be made under the Scheme.
Further, it has not been stated that the period of furlough will be deemed to be continuous as between the transferor and the transferee. This will be important to the extent a pre-transfer and/or a post-transfer period furlough is shorter than the 3 week period necessary to be subject to the Scheme.
Restrictions on working
It is now stipulated that furloughed employees cannot work for organisations that are “linked or associated” with the employer, as well as not working for the employer itself. The terms “linked” or “associated” are not defined, however. It seems logical that this will include –
- any group company, in the sense of any subsidiary or holding company of the employer, and any subsidiary of a holding company of the employer, with “holding company” and “subsidiary” having the meaning in section 1159 of the Companies Act 2006; and
- any associated employer within the meaning of various pieces of employment legislation, where one organisation is a company of which the other (directly or indirectly) has control or both are companies of which a third person (directly or indirectly) has control.
But what about organisations which have a lesser level of common ownership?
For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.
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