Coronavirus Job Retention Scheme – Updated Guidance (7 April 2020)

posted by KeithDaniel

Following our articles regarding the Coronavirus Job Retention Scheme (“the Scheme”) posted last week, the Government has since published some further information regarding the Scheme over the weekend. We have summarised it and set out below the key points.

Whilst on furlough leave, can an employee start a new job?

The Government has now clarified that employees can start a new job if they have been furloughed by their current employer. However, this is only the case if it is permitted under an employee’s contract of employment. Having said this, an employer may decide to exercise its discretion, taking into account the current crisis and the affect it might be having on its employees’ finances and waive any express restriction preventing an employee working elsewhere. We were quite surprised by this update as effectively the employee could now receive two wages – some of which is funded by the government. We believe that this has been announced to allow people to apply for front line jobs within the NHS for example, where there is a shortage to ease the burden on the front line.

A few practical points, an employer should consider whether or not it wishes to restrict its employees from working for a competing business. In addition, an employer should consider the fact that once business returns to normal and furlough leave comes to an end, it may see a reduction in staff as those employees that started a second job may decide to work for that employer full time.

If an employee is furloughed in their second job, this will not affect the cap under the Scheme as each job is separate.

Can an employer reclaim compulsory commission under the Scheme?

Guidance now confirms that an employer can reclaim 80% of compulsory commission back from HMRC in addition to basic salary. As we understand, the reference to ‘compulsory commission’ means contractual commission i.e. not discretionary commission.

Please note that only the commission from past sales can be reclaimed as an employee cannot work for the employer whilst furloughed and therefore the entitlement to new commission should not arise.

Does the 80% reimbursement cover non-monetary benefits?

Non-monetary benefits such as health insurance and those benefits provided through a salary sacrifice scheme are not included and should be provided in addition to furlough pay by the employer. Employees should still receive non-monetary benefits whilst on furlough leave as they are still employed. However, if an employer is struggling financially to continue providing these benefits it may wish to seek the consent of its employees to temporarily cancel the benefits for the short-term.

Can employees be furloughed more than once?

Yes, Government guidance now confirms that employees can be furloughed multiple times, provided their consent is obtained and provided that each furlough period is for a minimum of three weeks. This is helpful where there is a downturn in work rather than a closure meaning that some staff need to furloughed rather than all staff – an employer can rotate employees on furlough leave. This will no doubt assist in maintaining a fair balance as all employees have the ability to take furlough leave at some point – for the minimum term of 3 weeks. At the moment, guidance does not state how long an employee must work for an employer between furlough periods.

Does an employer need to notify its employees of furlough leave in writing?

New Government guidance now states that once employees have provided their consent to being placed on furlough leave, an employer should confirm the employees’ new status in writing and keep a record of this written notification for five years. Employers should ensure that they comply with this as it is an eligibility requirement when accessing reimbursement through the Scheme.  We believe that this has been introduced as part of the anti-fraud measures.

Can company directors be placed on furlough leave?

Government guidance has now confirmed that company directors can be furloughed, provided that they do not undertake any work for the company during this time. However, they can continue to carry out duties that are reasonably necessary to fulfill the statutory obligations they owe to the company i.e. file annual returns at Company House.

Any decision to furlough a company director should be made by the Board, noted in the company records and communicated in writing to the director concerned.

Can employees take annual leave whilst on furlough leave?

Purely from a Working Time Regulations 1998 perspective, it is likely that workers can take annual leave during furlough. However, one particular aspect that currently remains unclear is whether furloughed employees can take annual leave (including bank holidays) without it impacting the reimbursement that the employer claims through the Scheme. Hopefully we will receive some guidance on this from the Government shortly. In the meantime, we are suggesting that the most cautious approach would be not to direct employees to take holidays before the accrual of the minimum 3-week period of furlough (including bank holidays) and until we have more guidance on this point.

We understand that this is a difficult and confusing time for both employers and employees and we will endeavour to post employment related updates as soon as possible when further information becomes available.

We are currently offering a new retainer service for employers with regards to the Coronavirus pandemic. Through this retainer we are offering employment related guidance and template documentation for a fixed monthly fee. If you would like to learn more about this service please contact our employment department at employment@berrysmith.com