The “Furlough Scheme” – Updated Guidance

We have previously published a news alert with guidance regarding the so-called “furlough scheme” which we hope you found helpful. Overnight on 4th April, the Government updated this guidance to clarify several areas and below is a summary of the key updates for you to be aware of:

How employers can claim

Employers can claim under the scheme for all employees provided that they were on PAYE on 28th February 2020, this is not limited to those who would otherwise have been made redundant. The employer must also have enrolled for PAYE online, which can take up to 10 days, so if you haven’t already done this now is the time.

Public funds

If an employer is receiving public funds for employee salary payments the Government expects the employee won’t be furloughed, i.e. the employer cannot receive 100% of funds in the normal way plus 80% of an employee’s salary through the furlough scheme.

Reduncancy

If an employee was made redundant on or after 28th February an employer can re-hire them, furlough them and claim through the scheme. This can also apply to other employment terminations, such as where an employee resigned. However, be aware of the following in relation to resignations:

• Continuity of service will be preserved which might give the employee 2 years’ qualifying service for many employment rights;
• HMRC may find a way to consider this fraudulent and not reimburse through the scheme; and
• The employer has to fund the employee’s salary unless they agree otherwise so there may be cash flow issues.

Can employees work for other employers?

Employees who have been furloughed can work for another employer.

Can Company Directors be furloughed?

Company directors can be furloughed for their PAYE salary but cannot do any work other than comply with their statutory duties. There is no detail in the guidance but this is likely to be extremely limited. Furloughing a director will also need to be passed by formal resolution with the approval of the Board.

Furlough notification

An employee’s furlough notification must be in writing and records kept for 5 years.

What can be reclaimed by employers?

Discretionary bonuses and commission, tips and benefits in kind are not included in what can be reclaimed by employers but wages, fees and compulsory commission payments are.

How long will you be furloughed?

Employees can be furloughed multiple times but each period must be for a minimum of 3 weeks.

As ever, if you have any questions please contact the Employment & HR team at [email protected]