You need to stay on your
toes with these furlough rules. On 22
May 2020, the Treasury published their second Direction on the scope of the Coronavirus Job
Retention Scheme. As you may recall, the
Treasury’s first Direction was the legal basis for the scheme, albeit that it
conflicted in a number of respects with the previously published HMRC
guidance. The second Direction not only
resolves some of those conflicts, but also clarifies and even reverses some of
the content of the first Direction. The
second Direction applies to any CJRS claims made on or after 22 May 2020, together
with any earlier claims that would have complied with it had it been in force
at the relevant time.
As I said in a previous bulletin, employers should be entitled to rely upon
the HMRC guidance to the extent that it conflicted with the first Direction on
the issue of what it was necessary to do to record a furlough arrangement for
the purposes of claiming under the CJRS.
That is now borne out by the second Direction. There must still be an agreement between the
employer and the employee “that the
employee will cease all work in relation to their employment”, but the
important change here is that it is not necessary for the agreement itself to
be in writing provided that it is confirmed in writing (including email) and
kept until 30 June 2025.
Other discrepancies between
the guidance and the first Direction which have been resolved include the scope
of permitted training, what counts as regular pay and the timing of furlough
payment to staff.
With regard to sickness absence, the second Direction reflects to a great extent the existing HMRC guidance which allows an employer and employee to decide whether that employee should come off sick leave (ordinarily provided that it is not unpaid leave which commenced before 1 March 2020) and go onto furlough leave instead. However, the attempted resolution doesn’t quite make sense and we shouldn’t be surprised to see any further Direction wording be amended on this issue. Therefore, for the time being, it would be reasonable to continue to follow HMRC’s guidance.
We have already been advised by the Chancellor that the CJRS will be extended until 31 October 2020, although with modifications after 31 July 2020 relating to employer contribution and the availability of part-time furlough for those employers already claiming under the scheme. However, the second Direction is wholly silent in this regard and also only covers the period to 30 June 2020. We therefore wait with bated breath for the Chancellor’s further announcement which is due later this week. Further HMRC guidance and a third Treasury Direction are bound to follow.
Finally, there is still a
world of employment law away from furlough leave. In that world, the EAT has just held that any
beneficial changes made by a transferor to an employee’s terms pre-transfer
because of the transfer are unenforceable against the transferee. It’s still fine for a transferee and employee
to agree to beneficial changes post-transfer, but it would be an abuse of the
TUPE Regulations for a transferee to be forced by the transferor to accept an
enhancement of an employee’s rights when all TUPE requires is the safeguarding
of an employee’s existing rights.
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.