Furlough For Now.

Employers were able to submit their first claims under the Government’s Coronavirus Job Retention Scheme on 20 April 2020.  For a Government scheme which hands out money operated by a department which usually takes money, it seems to have worked surprisingly smoothly.

On 17 April 2020, it was announced that the scheme would be extended by a month until the end of June 2020.  Many employers are already seeking to extend furlough leave beyond the original leave end date where it co-incided with the original scheme end date of 31 May 2020.

The Treasury Direction published on 15 April 2020 (under which HMRC operates the CJRS) requires an employer and employee to “have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment” in order for the employer to be able to claim under the CJRS.  This would appear to conflict with both the original and the updated HMRC guidance (now on its eighth version) which simply states that employers must “confirm in writing to their employee confirming that they have been furloughed”.  It goes on to say that they will have valid consent to claim “If this is done in a way that is consistent with employment law” and that “the employee does not have to provide a written response”.  

In light of this apparent conflict, HMRC were pressed to clarify their position.  They have confirmed that not only do they believe that their guidance is consistent with the Direction, but that “customers should consider the guidance in the first instance when seeking to understand the operation of the scheme”.  That’s clear then – you are entitled to rely on the guidance.

It’s always preferable to attempt to obtain written consent whenever you can and that would apply to furlough generally as well as any extension.  In order to avoid uncertainty in the event of no response (bearing in mind the need for consent to be “consistent with employment law”), employees should be advised that any failure to reply will be taken as deemed consent.  However, if you didn’t obtain written consent at the start of furlough leave, the furloughed staff haven’t objected when they received their reduced rate of furlough pay in their April 2020 payroll and there’s no need to extend the period of furlough leave, you may decide that it’s best to let sleeping furloughed staff lie.

At least we now know that employees can choose to take holiday during furlough leave, provided that it is paid at full pre-furlough pay.  The employer will therefore need to top up furlough pay to full pay out of its own pocket.  It’s still unclear whether employers can force employees to take holiday, but many employers will have required (and will require) all staff to have taken holidays on the recent Easter and imminent May bank holidays. They might also want their staff to take at least a week’s annual leave during a three month furlough period to avoid accrued holiday building up and furloughed staff wanting to take leave on their return at a time when non-furloughed staff decide that it’s time for them to take a break.  Employers will have to manage holiday requests very carefully over the summer period to ensure fairness across the whole workforce.

When the fifth version of HMRC’s guidance was published, it appeared that we had our long-awaited answer to whether transferees could furlough staff who had transferred to them under the TUPE Regulations.  However, particularly when read in conjunction with the Treasury Direction, it may be the case that the transferee can only furlough staff in a business transfer scenario, not where there was a service provisions change.  On this issue amongst others, further clarity has been requested.

The contents of this article are intended as guidance for readers. It can be no substitute for specific advice. Consequently we cannot accept responsibility for this information, errors or matters affected by subsequent changes in the law, or the content of any website referred to in this article. © Mundays LLP.

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