Furlough scheme - government updates guidance (again)

On Thursday 8 April, long after most of us had logged off for the Easter weekend, the government updated its guidance on the Coronavirus: Job Retention Scheme.  That means we are now on the third draft. 

What's changed?

There are three key changes: 

Employees transferred under a TUPE transfer can be furloughed

The government has confirmed that a new employer can, potentially, furlough its newly acquired staff if the transfer took place after 28 February. That's good news and will come as a relief to many of our clients.

Furloughing staff who are ill or shielding

Organisations can furlough staff even if they are ill. However, if you decide to furlough someone who is off sick, they can't receive sick pay/SSP once they are furloughed. If a member of staff becomes ill whilst they are being furloughed, you can decide whether to 'unfurlough' them and put them on SSP/sick pay or keep them on furlough, at their furloughed rate of pay.

The updated guidance also makes it clear that anyone who is shielding or living in the same house as someone who is can be furloughed. As we suspected, there doesn't have to be a redundancy situation. 

Contractors with public sector engagements in scope of IR35

There's a new section on whether some contractors covered by the public sector rules around IR35 can be furloughed. The guidance makes it clear that public sector employers will follow the Crown Commercial Services guidance and continue to pay staff engaged as contractors. But, there is scope for some contractors to be furloughed. 

Holiday during furlough

The guidance does not address the issue of holiday at all - so employers are still in the dark on the most controversial issue about the furlough scheme. Our views on  holiday and furlough are available here.

Other changes

The guidance clarifies:

• that the reclaimable NI and pension elements are on the furlough salary, not normal salary
• that employees cannot work for organisations that are linked to the employer, as well as not working for the employer, when on furlough
• that people returning from family related leave such as maternity leave , should have their furloughed salary calculated against their salary - not the pay they received whilst on leave
• that you can furlough employees on all categories of immigration visas
• that if a group of companies have multiple PAYE schemes which they have consolidated after 28 February, they can still place employees on furlough
• that all the grant received to cover an employee's subsidised furlough pay must be paid to them in the form of money and no part of it should be 'netted off' to pay for the provision of benefits or a salary sacrifice scheme.

Our view 

There's still no Regulations in sight and we are beginning to wonder if we'll ever see them. Whilst this scheme is a life saver for many businesses (and their staff), if they don't understand the rules of the game, they may make mistakes and might be penalised further down the road. That's in no-one's interests and we call on the government to explain precisely how the scheme will work.

Our Coronavirus updates

We're working hard to keep you up to date with legal developments around Coronavirus. We've set up a portal which includes lots of helpful articles and advice to help you.

If you have a query, that we haven't answered, please contact us.