06 April 2020
HMRC has now updated its guidance on the Coronavirus Job Retention Scheme (“the Scheme”), providing much needed clarification on certain matters pertaining to the Scheme.
The updated guidance can be accessed here.
Amongst other things, the updated guidance has clarified that employees can commence new employment when on furlough. This means an employee might end up earning 80% of the substantive salary and 100% of a new one. The guidance sets out that the secondary employment has to be permitted under the substantive contract, however, it would be competent for the employer to waive that.
Laura Salmond, Partner
The updated guidance also makes clear employees who have been dismissed for any reason since 28 February 2020 can be rehired and placed on furlough. The original guidance referred to employees who had been made redundant and it was not clear whether employees who had been dismissed for other reasons could be rehired.
It had also been clarified that the scheme can cover ‘limb (b) workers’ – i.e, non-employees who satisfy the definition of ‘worker’ in section 230(3)(b) of the Employment Rights Act – so long as they are paid through PAYE.
Other matters clarified include confirmation that:
- an employer can reclaim 80% of compulsory (presumably meaning contractual) commission back from HMRC, as well as basic salary
- the 80% does not include non-monetary benefits (e.g. the value of health insurance or a car)
- Company directors can be furloughed. They can still perform their statutory duties, but not other work for the company.
It has also now been confirmed that 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).
The previous guidance did not require the furlough status to be recorded in writing. The updated guidance addresses this. Employers must notify employees of their furlough status in writing and keep the record of the written notification for five years.
Whilst the updated guidance adds some clarification and detail to the original HMRC guidance published on 26 March 2020, it still does not address key questions. Most significantly, it does not give any indication of how the scheme interacts with annual leave. In particular, can employees take annual leave when on furlough, and what should they be paid?
Other areas which remain unclear are: What do ‘statutory duties’ actually cover for company directors and Are employees who TUPE into a business after 28 February 2020 covered?
Given the forthcoming Easter "holidays", the position regarding the interplay between furlough and annual leave requires to be clarified. Hopefully further guidance will be provided from HMRC shortly. As soon as it is, we will provide a further update. In the meantime, do not hesitate to contact our Employment Team if you have any queries relating to the scheme.
Laura Salmond, Partner: E: email@example.com / T: 0141 225 5315