I know I said I wasn’t going to publish any more Furlough FAQs but I couldn’t resist.
HMRC have updated the information for employers and answered some of the things we were worrying about so I want to deal with those things:-
- Employees can start a new job when on furlough (meaning they might end up earning 80% of the old salary and 100% of a new one). This was not clear in the earlier guidance, but the new guidance expressly allows it. The guidance does say it has to be allowed under the old employment contract, but presumably the old employer can waive that…..IF THEY WANT TO. Given that you may want to retain control over exactly when your employee is called back in, you may still want to prohibit them from doing this.
- An employer can reclaim 80% of compulsory (presumably meaning contractual) commission back from HMRC, as well as basic salary. This can only be referring to the commission from past sales as the furloughed employees cannot be completing new sales when on furlough (because they are not working).
- Employers can reclaim 80% of fees (whatever that means) from HMRC. The previous guidance said they could not.
- The 80% does not include non-monetary benefits (eg. the value of health insurance or a car) or bonus or tips but it does include past overtime pay.
- It has clarified (although we all knew this anyway) that Company directors can be furloughed provided the Board vote on this and a Board minute is entered into. They can still perform their statutory duties, but not other work for the company. I would suggest this is very minimal work like filing company returns and ensuring the business is not going to become insolvent.
- It has confirmed employees can be furloughed multiple times, i.e. they can be furloughed, brought back to work, then re-furloughed (subject to each furlough period being at least three weeks).
- NEW: Employers must notify employees of their furlough status in writing (the previous guidance did not require it be in writing) and keep the record of that written notification for five years. Thus if you have furloughed employees and not got round to telling them in writing yet, do so, making it clear the date they were furloughed from.
- It reiterates that the furloughed employee is not to do any work – talking about re-allocating their duties to the staff who are not furloughed. I’ve heard lots of stories this week of staff being furloughed but still expected to deal with emails/attend meetings – that will not be eligible!
- It encourages employers to furlough those who are having to stay at home to look after their children (who you might otherwise have on unpaid leave) or who are shielding, if they cannot work from home and you might otherwise make them redundant. The important words are the ones in italics: you might be content to deal with their absence as unpaid leave and have work for them to do so you don’t have to do this.
- It reiterates that if you cut hours or pay by agreement with staff before the furlough came about, you will not be able to claim under the scheme.
- It explains that if someone is on a fixed term contract that is due to end you may decide to extend the contract and furlough the person. You don’t have to do this of course – if you already know there won’t be any work available going forward.
Lots of areas remain unclear. In particular:
- Whether employees can take annual leave without jeopardising the HMRC funding. ACAS appear to be suggesting on their site that an employee cannot be on furlough and annual leave at the same time. Legally there is nothing to stop a date being designated as holiday.
Refreshing Law Limited
4 April 2020