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Employment Law Update - Covid-19 - Furlough Leave – latest tweaks!


The expectation is that employers will be able to start making claims in relation to employees on furlough leave from next week. In the meantime, further information has been issued upon the working of the scheme. Whether this will be the last we shall have to wait and see.

The Treasury has issued a Direction to HMRC in relation to how it is required to operate the scheme and further slightly updated guidance has been issued to the wider pubic. The Direction to HMRC is not exactly in user-friendly language! The following points appear to be of relevance: -


• As we know employees must be instructed to cease all work, but the Direction says that this scheme only applies if this is agreed in writing between the employer and employee. Agreement in writing can include an exchange of emails. However, some employers who have already furloughed employees may not have specifically sought confirmatory agreement from employees in these terms – especially where contracts include a right to lay-off in the first place and there is no contractual variation involved. Therefore, I would suggest that it is worth reviewing the mechanism by which employees were put on Furlough Leave before this detail was announced to ensure that no technical failing will be argued at a later date.

• There appears to be a tightening up of what amounts to salary to disregard items which are not regular salary or wages. Regular wages must be “not conditional upon any matter” i.e. they are guaranteed and predictable, not amount to benefits in kind and be paid in accordance with a legally enforceable agreement. This appears to rule out any performance related payments although a contractually guaranteed regular payment of commission would appear to be something which is reclaimable.

• A headline suggests that the scheme has now been extended to cover new employees who were employed by 19th March, as opposed to 28th February. However, the mechanics of the change mean that many of those who started in March are not brought into the scheme. The key is whether the employer had submitted real time information payroll date by 19th March. For those paid monthly such data is routinely provided in the payroll run but is often not notified until after 19th March. This change is best described as messy and it is an illustration of how complicated the scheme is now becoming.

• Still nothing on holidays! The thinking on this based on a revised ACAS position and information provided by an HMRC official on social media is that holidays can be taken during Furlough Leave without breaking the sequence of it, but that employers should make up pay to 100% for any holiday taken.

That’s all clear then! It will be interesting to see what happens when claims start going in – albeit that the sheer weight of them means that in reality HMRC is not likely to be rejecting many claims at first, but rather following up with audits and seeking repayments at a later date.


Nigel Tillott, Head of Employment and Regulatory Law, DDI 01452 689100 

 

 
 
 

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