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On 4 April, the Government released updated guidance on the Coronavirus Job Retention Scheme (CJRS). The updated guidance provides clarity on some areas of the CJRS, although there are still some important unanswered questions.
No requirement for clear redundancy situation
The most recent updated guidance (4 April 2020) seems to maintain the wider discretion that employers have in determining when to furlough their employees, whereas it was initially thought that it might be necessary for employees to have otherwise been redundant for them to be furloughed. Now it is accepted that employers will not need to demonstrate that there was a clear redundancy situation. Provided an employer can demonstrate that their business was affected by the COVID-19 outbreak, and as such they needed to furlough staff, this will be enough.
However, what has been less clear is where an employer is not generally furloughing staff because their operations are continuing (such as care, homelessness support and supermarket retail) and whether staff who cannot work due to having to shield or look after a shielder or have child care issues due to the COVID-19 crisis can be furloughed for that reason alone. Until the recent guidance it was considered by some commentators to be possible to furlough these staff even where their jobs were clearly safe and the business not obviously impacted by COVID-19. However, the recent guidance now states that in relation to shielders (or those who have to care for shielders) they can be furloughed 'where you would otherwise have to make them redundant'. Some commentators are of the view that this goes against the otherwise wider discretion that has been given to the employer elsewhere in the guidance and such requirement has not been mentioned as applying to those who have child care issues and so cannot work as a result. It is difficult to see that the government would have intended to treat such groups differently.
Further clarity will certainly be needed on this specific issue and legal advisors and other interested parties are seeking that clarity from the government so it is hoped that this will shortly be resolved one way or the other.
Individuals with more than one employer
The updated guidance clarifies that employees can start a new job for another employer whilst on furlough. This means the employee may end up earning 80% of their old salary and 100% of their new one! Whether or not secondary employment is permitted will be determined by the terms of the individual’s employment contact in the role in which they have been furloughed or, if the contract is silent on this, by agreement with their original employer.
Employees who stopped working after 28 February can be re-hired
Earlier versions of the guidance were clear that employers could re-hire and furlough employees who had previously been made redundant by them after 28 February 2020. The guidance now goes one step further by confirming that an employer can rehire any employee who has stopped working for them for whatever reason after 28 February 2020. This includes employees who have resigned or were dismissed for other reasons.
Clarity on payments that employers can recover under CJRS
There has been some further clarity over the payments that employers can recoup under the CJRS. Employers can claim for any regular payments they are obliged to pay their employees, which includes wages, past overtime, fees and compulsory commission payments. The 80% the employer can claim back from the government does not however include non-monetary benefits, such as the value of health insurance or a car.
New information on benefits in kind and salary sacrifice schemes
The updated guidance also contains new information in relation to benefits in kind and salary sacrifice schemes. It states that the reference salary should not include the cost of non-monetary benefits provided to employees, and further, that benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Further updates on this will be provided in due course.
Re-furloughing employees is permitted
Whilst we thought that it would be the case, the guidance now confirms that employees can be furloughed multiple times; for example, they can be furloughed, brought back to work for a period of time, and then re-furloughed. Each furlough period needs to be at least 3 weeks long, but the working periods in between each period of furlough can be of any length. This will allow employers to rotate the periods that employees are on furlough to suit the needs of their business.
Company directors can be furloughed
The guidance confirms that company directors can be furloughed. During the furlough period, the director will not be able to carry out any work for the company but will be able to perform their statutory duties. The guidance does not give any indication of what ‘statutory duties’ will be covered, but we anticipate that it will be limited to matters such as filing an annual return with Companies House or attending an AGM.
Notification of furlough must be in writing
Importantly, the updated guidance also confirms that employers must notify employees of their furlough status in writing and the employer must keep the record of that written notification for five years.
Whilst the revised guidance is helpful in a number of areas it still does not address a number of significant issues such as whether employees who TUPE into a business after the 28 February 2020 are eligible under the scheme and can be furloughed by their new employer, and also whether employees can take annual leave when on furlough and what should they be paid for that leave.
As this remains an area which continues to be subject to change, we recommend employers should ensure they keep up-to-date with the current guidance which can be found on the government website.
For further information on the updated CJRS guidance, or any issues relating to furloughing employees, please contact a member of the Employment Team.