The government updated its employers’ guidance regarding its Coronavirus Job Retention Scheme (CJRS) once again on 20 April 2020. The guidance has added clarity to a number of sections, which we have summarised below.
The employee’s guidance was also updated on 17 April 2020 to add some clarity to the issue of annual leave while on furlough. At the time of writing, the employer’s guidance has not been updated on this topic.
This note summarises the latest additions and is accurate as at 24 April 2020. This note should be read in conjunction with our previous update, available here, and with the supporting FAQ document which is available here.
Furlough and holiday pay
The latest guidance for employees has clarified that annual leave will continue to accrue in accordance with the terms of the contract of employment.
Schools can agree with their employees to vary contractual holiday pay entitlement as part of the furlough agreement, however, workers must retain the minimum of 5.6 weeks of statutory paid annual leave each year.
As anticipated, it is possible for employees to take holiday while on furlough. Any such holiday must be paid at the normal rate of pay. This means that schools may need to “top up” to 100% of normal pay for time on holiday.
The guidance has also clarified the position on bank holidays. If staff are usually required to work bank holidays then it is possible to agree that this is included in the grant payment under the CJRS. Alternatively, if employees are usually required to take the bank holiday as leave, then it will be for the school to top up the employee’s pay to the usual rate or provide a day’s holiday in lieu.
The guidance is however still silent on whether schools can compel employees to take holiday while on furlough. We anticipate that provided the employer gives the required notice under the Working Time Regulations (i.e. twice as much notice as the number of days leave) then it is likely to be possible for schools to require staff to take leave, however, we need further guidance to be published to determine this definitively.
Schools do, however, have the right to restrict when leave can be taken if there is a business need to do so. This applies for both the furlough period and the recovery period thereafter.
HMRC has confirmed that the policy on holiday pay during furlough will remain under review during this unprecedented time, so we anticipate that further guidance will be published.
The updated guidance has also clarified a number of further points for employers, many of which are likely to be relevant to schools:
- Employees are encouraged to report instances of employers abusing the scheme through HMRC’s online portal. Examples of abuse include employees being asked to work whilst furloughed, where a submitted claim pre-dates the date that the employee was actually furloughed, or where the employee has not been paid the subsidy from the scheme.
- For employees on fixed term contracts (FTC), employers can renew or extend the FTC whilst the employee is on furlough if it is so minded. There is no minimum period which must be left to run on the FTC to enable it to be renewed or extended, but it must not have ended. FTC which ended, without extension or renewal, on or before 19 March 2020 will not qualify for the grant under the CJRS.
- To be eligible for the grant, employers must confirm in writing to their employee that they have been furloughed. Provided this is done in a way that is consistent with employment law, the employee’s consent is valid for the purposes of claiming under the CJRS. The revised guidance suggests that there needs to be an auditable written record of the agreement, but that the employee does not have to provide a written response. This is inconsistent with the wording of the Treasury Direction, to which we referred in our previous guidance note, which suggests that written consent from the employee is required. Ideally, we would recommend that schools seek written confirmation from an employee of their agreement to be furloughed. However, it is our understanding that it is not the intention of HMRC to reject claims from employers who have not obtained such written consent to cease all work for the employer. We consider that it is unlikely that HMRC will change this approach. If they do, there would likely be grounds for challenge.
- HMRC have the right to retrospectively audit all or parts of an employer’s claim under the scheme.
Some helpful clarity, but there are still gaps
The latest guidance has provided further clarity for schools about the CJRS. There still remains, however, a number of uncertainties, not least in respect of the interaction between furlough leave and annual leave. We anticipate further guidance in the coming weeks, particularly now that the scheme is live.