The Coronavirus Job Retention Scheme – Further Details
The government published update guidance on the Coronavirus Job Retention Scheme (“the Scheme”) on 4 April.
The main points are these:-
- It has been made expressly clear that employees can start a new job when on furlough without jeopardising funding under the Scheme.
- An employer can reclaim 80% of not just salary or wages, but any “regular payments” that they are obliged to pay employees, including overtime payments, “fees” and compulsory (presumably meaning contractual) commission payments – up to the cap of £2,500 per month. Although not given as a listed example, this must surely include car allowance. Whilst payments for private fuel under a fuel allowance by means of a card or account directly by the employer to the supplier will be excluded (as they will not be payments to the employee), arguably where the employee pays for private fuel and is then reimbursed by the employer, these payments will fall within the Scheme.
- Expressly excluded from Scheme funding are discretionary bonus (including tips) and commission payments and “non-cash payments”, so non-monetary benefits (e.g. cars or life or medical insurance) are not included.
- It has been made expressly clear that salaried company directors (including of personal service companies) can be furloughed under the Scheme. A board resolution must be passed to effect this, and it must be noted in the company records Furloughed directors can still perform their statutory duties, provided they do no more than would reasonably be judged necessary for that purpose, e.g. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
- It has been made expressly clear that members of LLPs who are treated as employees for tax purposes can be furloughed under the Scheme.
- It has been confirmed that employees can be furloughed multiple times, i.e. they can be furloughed, brought back to work, then furloughed again – subject to funding being available only for any furlough period which lasts for at least three weeks.
- It is newly stipulated that employers must not only notify employees of their furlough status, but that they must do so in writing and keep the record of that written notification for five years.
Some areas remain unclear. Two of the main ones are these:-
- Are employees whose continuous service commenced on or before 28 February 2020 but who transfer to a new employer after this date under TUPE covered:
For any period of furlough which commenced less than 3 weeks before the transfer, even if, taking into account a period extending beyond the transfer, it lasts for at least 3 weeks in total?
Otherwise for any period of furlough post transfer?
Unless the government expressly provides for this in due course, it would appear not, as although the rights and obligations of the employee under the employment automatically transfer, as between employee and employer, by virtue of TUPE, it will remain that the employee will not have been furloughed with the transferor from the point of the transfer and nor will they have been on the transferee’s payroll as of 28 February.
- Can an employee be furloughed under the Scheme and on annual leave at the same time?
Guidance published by Acas states not. It therefore remains prudent that in order to preserve funding, unless and until the government clarifies that the position is to the contrary, employers ensure that no days during furlough (including bank holidays) are treated as paid annual leave such that this might prevent a period of furlough continuing unbroken at least 3 weeks.
For our updated observations on all of the main aspects of the Scheme, taking into account the above, and a link to the government’s published guidance, click here.
For my article on changes to legislation effected on 28 March relating to statutory sick pay for employees off sick or in self-isolation due to COVID-19, click here.
For our regularly-updated wider guidance for employers on the impact of the virus outbreak, click here.
For advice on any of these issues, call us on 0800 294 5927 or click here to make an on-line enquiry.