Rachael Lloyd
Posted on 14 Apr 2020

Coronavirus (COVID-19) – latest guidance for employers on the Job Retention Scheme

BREAKING NEWS for employers 14 April 2020

Late last Thursday evening (09 April), the Government introduced some new guidance provisions relating to the Coronavirus Job Retention Scheme. We have reviewed these and summarise the changes below.

Employers CAN furlough those employees who are transferred under TUPE after 28 February 2020

This was previously a gaping hole in the guidance. The new guidance confirms that employers who are 'transferees' under the TUPE legislation, as a result of a business purchase, can furlough those employees who have transferred to them after 28 February 2020 (and who were, as a result, not on their payroll as at 28 February 2020 – which is otherwise a criterion of eligibility for the Scheme). The guidance does not expressly state that employees transferring as a result of a service provision change will be covered by this rule, but we consider that this is more than likely to be the Government's intention.

Employers CAN utilise furlough for employees on sick leave (in some circumstances)

The Government has advised that:

  • if employers want to furlough, for business reasons, employees who are currently off sick, they can do so. In these cases, the employees should no longer receive sick pay and would be classified as furloughed employees.
  • employers can furlough employees who are being shielded or off on long-term sick leave (the former was already outlined in a previous version of the guidance). However, it is up to employers whether to furlough these employees. Employers can claim from both the Scheme and the Statutory Sick Pay ('SSP') rebate scheme for the same employee, but not for the same period of time.

However, the Scheme is not intended for short-term absences from work due to sickness, and short-term illness or self-isolation should NOT be a consideration in deciding whether to furlough an employee. This is intended to prevent employers from 'topping up' any entitlement to SSP for short-term illness. In any event, this is unlikely to be possible, given that the minimum period of furlough is three weeks.

If an employee becomes sick whilst on furlough, the employer has the option to decide whether to move that employee onto SSP or to keep them on furlough, at their furloughed rate of pay. In some respects, this seems slightly at odds with the suggestion that the Scheme is not intended for short-term absences from work due to sickness. Once again, this is something that would benefit from clarification by the Government.

Whilst there appears to be a large amount of discretion on the part of employers as to how to treat those employees who are on sick leave, we would advise that the usual considerations in respect of potential disability discrimination must be made when making decisions. That being said, in those situations where there are no potential discrimination issues to consider, there may be some mileage in employers utilising sick leave and pay in the way in which they would normally, to ensure a clear designation of sickness absence for any future absence management procedures. Otherwise, these may be masked by reclassification of sick leave as furlough.

There is NO LONGER a requirement for shielding employees to have 'otherwise been made redundant' to be eligible for furlough

This was perhaps the most frustrating inconsistency in the previous guidance. Whilst employees with caring responsibilities resulting from Coronavirus (COVID-19) could be furloughed with, seemingly, no further eligibility criteria required, those employees who were shielding could only be furloughed if they would 'otherwise have been made redundant'. Given that this would not be applicable in the vast majority of cases, vulnerable employees were being clearly disadvantaged as a result of the Government's drafting.

This anomaly has now been removed in the latest raft of guidance, so that there is no requirement for the employee to have otherwise been made redundant. The guidance simply states: "employees who are unable to work because they are shielding in line with Public Health guidance (or need to stay home with someone who is shielding) can be furloughed".

Employers CAN furlough employees who have a right to work under ANY kind of visa

There are certain residence permits which include the condition that the individual has 'no recourse to public funds'; for example, benefits, tax credits or housing assistance. However, the Government has clarified that reimbursement under the Scheme is not considered as 'access to public funds', which means that employees working under any category of visa can be furloughed, including those with the above condition.

Reclaimable employer National Insurance and pension contributions will be calculated on the REDUCED 80% salary, not normal salary

This was certainly implicit in the previous guidance, and we have been advising our clients accordingly over the past couple of weeks. However, the new guidance has now made it clear that employer National Insurance and pension contributions are paid on the subsidised furlough pay only. In respect of employer pension contributions, these can only be reclaimed up to the level of the minimum automatic enrolment employer contribution (3% of qualifying earnings).

Whilst on furlough, employees CANNOT work for organisations linked or associated to their employer, as well as not being allowed to work for the employer itself

Whilst this was implicit in the previous version of the guidance, this has been clarified undoubtedly to ensure that employers do not attempt to exploit the Scheme by claiming reimbursement of salary from HMRC whilst putting their furloughed employees to work in other group companies. There is no definition of 'linked' or 'associated' in the guidance, but we would consider that the Government's intention is for this to apply widely, so that partner organisations, for example, would be included. It is likely that this will be one of the areas which HMRC will scrutinise in any retrospective audits it undertakes.

There is an UPDATED list of the information required to make a claim

The Scheme's online portal is rumoured to be up and running by Monday, 20 April 2020, although the guidance has not officially confirmed this. However, the guidance has included a more comprehensive list of the information employers will need to make a claim to HRMC, as follows:

  • Employer PAYE reference number.
  • Number of employees being furloughed.
  • National Insurance numbers of the furloughed employees.
  • Names of the furloughed employees.
  • Payroll / works numbers of the furloughed employees.
  • Self-Assessment Unique Taxpayer reference / Corporation Tax Unique Taxpayer reference / Company Registration number.
  • Claim period (start and end date).
  • Amount claimed (per minimum 3 -consecutive week period).
  • Bank account and sort code.
  • Contact name and phone number.

If your organisation uses an agent who is authorised to act on its behalf for PAYE purposes, then they will be able to make the relevant claim. However, this is not the case if a 'file only' agent is used (i.e. an individual who files the Real Time Information ('RTI') return, but doesn't act for the organisation on any other matters).

We are STILL none the wiser about the interaction between furlough and holiday

Unfortunately, the much needed clarification at the top of every Employment lawyer's Easter wish list has not arrived. Last week, HMRC's Customer Support function seemed to suggest on Twitter that employees could take holiday during furlough, and they would be entitled to be paid their full salary for that period of holiday.

However, a read of the full thread shows some inconsistency in the responses from HMRC, and we would not advise employers to adopt such an approach unless / until this is clarified by official Government guidance. Certainly, if an approach to the taking of holiday during furlough was already formulated by HMRC and the Government during the past week (as the Twitter thread seems to suggest), then it is very surprising that this has not made its way into the latest official guidance.


If you would like to discuss any of the issues raised in this article, or have other concerns about the impact of Coronavirus, please contact Rachael Lloyd, James Baker or Andrew Tobey in Michelmores' Employment team.

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This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.