The Coronavirus Job Retention Scheme: Update - Kuits Solicitors Manchester

The Coronavirus Job Retention Scheme: Update

The Coronavirus Job Retention Scheme: Update

20th April 2020 - Published by Kuits employment team

In this update, we consider the latest version of the government guidance on the Coronavirus Job Retention Scheme that was published on Friday 17 April, their fifth version of the guidance.

In particular;

  • Annual leave and furlough
  • Is a “written agreement” required that the employee ceases work still required?
  • Furloughing employees who are on long term sickness absence and in receipt of SSP
  • HMRC portal launched (April 20)

Annual leave and furlough

One of the most vexing issues to date in relation to the Scheme is the interplay between furlough and annual leave:

  • Can an employee take holiday on furlough?
  • Can the employer recover the holiday pay under the scheme?
  • Is the pay 80% or 100% of the employee’s usual pay?
  • Can employers force employees to take annual leave in accordance with the Working Time Regulations?

Version five of the guidance has addressed some of these points in both the employer and employee guidance. The following has been confirmed:

  • Employees can take holiday whilst on furlough;
  • Employers must pay employees their “usual” holiday pay, which is based on normal remuneration before the Scheme commenced;
  • The employer will therefore need to “top up” the grant under the scheme;
  • Employers have the “flexibility to restrict when leave can be taken if there is a business need”.

The guidance does not address whether the employer can require the employee to take annual leave during the period of furlough. Our view remains that the employer will be able to do so. The guidance suggests that the holiday policy will be kept under review so we expect further clarification on that over the days or weeks ahead.

Is a “written agreement” between employee and employer confirming that the employee will cease work still required?

Prior to the release of the fifth version of the guidance on Friday, we reported a concern arising from paragraph 6.7 of the Treasury’s direction that the employer must secure the employee’s agreement not to work during the period of furlough. The direction stated that the employee’s written response to not work during furlough must be secured by the employer.

Version five of the guidance states: “If this is not done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS. There needs to be a written record, but the employee does not have to provide a written response.”

Based on the guidance, the suggestion is that a “written response” to the furlough agreement is not required, this is consistent with employment law. However, until we receive an updated version of the Treasury’s direction, we urge that employers check that all of their furloughed staff have expressly agreed to the furlough agreement and that this can be evidenced.

Furloughing employees who are on long term sickness absence and in receipt of SSP

In version four of the guidance, it was stated that “employers are also entitled to furlough employees who are being shielded or off on long term sick leave.  It is up to employers to decide whether to furlough these employees.”

The guidance therefore suggests you can furlough an employee on long term sickness absence. This part of the guidance appears to be inconsistent with the Treasury’s Direction. As the Direction trumps the guidance in terms of its legal effect, we again recommend that employers should treat such matter with caution, both in terms of the message to employees on long term sick leave in receipt of SSP and in seeking reimbursement from HMRC.

Put simply, an update to the direction is required to address the inconsistency and we are hopeful that the government will do this in the next few days.

Additional information

  • HMRC has updated its statutory payments manual to provide that employees do not qualify for SSP if they are on furlough.
  • On 16 April 2020 the Statutory Sick Pay (General) (Coronavirus Amendment) (No. 3) Regulations 2020 came into force and applies to ‘shielding employees’. The Regulations provide that a person is deemed to be incapable of work if they are unable to work because they fall within the extremely vulnerable category and have been advised to shield.

 HMRC portal launched

This morning (April 20), the HMRC portal has gone live, meaning employers can now apply to seek a reimbursement of a furloughed employee’s salary. It can be accessed through the government gateway by clicking HERE.

The government has also produced a step by step guide in how to complete the application.

To speak to an experienced advisor confidentially about furlough or any other employment issues, please call our employment team on 0161 838 7851 or contact them online HERE.

Kuits will be hosting a webinar to help employers navigate their way through this tricky time, providing up-to-date information on furloughed employees and how to plan a redundancy programme without falling foul of the law. You can register for free HERE.

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