It’s clear from the HMRC guidance on the coronavirus job retention scheme (CJRS) that if an employee becomes sick while on furlough, they can remain on furlough pay. If the employer wishes to move the employee from furlough pay or Statutory Sick Pay (SSP), they may do so. The only rule being that the employee cannot receive both benefits at the same time.
In practice it is likely that the employee will remain on furlough and will continue to be paid in accordance with this agreement, rather than putting them on SSP pay as this is a much less generous benefit. However, where the contractual SSP is for full pay, there may be claims that the employer should top up the payment.
The question of whether a self-isolating employee who would otherwise be working could be placed on furlough has been more contentious as the guidance is less clear.
Guidance from HMRC and ‘business reasons’
HMRC’s guidance online to check which employees firms can put on furlough through the CJRS states that the scheme “is not intended for short-term absences from work due to sickness”.
It goes on to say that “short-term illness or self-isolation should not be a consideration when deciding if you should furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so”.
The guidance to employees is similar in its stance that “it is not intended for short-term absences from work due to sickness”. It adds: “If your employer wants to furlough you for business reasons and you are currently off sick, they are eligible to do so as with other employees.”
The specific reference to furlough being used only if there are ‘business reasons’ will understandably have deterred many employers from using the scheme for staff who are self-isolating due to Covid. There was no definition of what ‘business reasons’ meant and cautious employers would not have wanted to risk a claim for furlough that may later be regarded as an abuse of the scheme which could lead to the threat of HMRC sanctions being imposed.
However, recent reports have suggested that the guidance was written in this way deliberately due to concerns expressed by the Treasury, that if it had explicitly stated that self-isolating employees could be placed on furlough it would have led to many more claims on the scheme and substantially increased the cost.
Direction from the Treasury
The furlough scheme is not based on statutory regulations or acts of parliament, but on the various Treasury directions that have been issued alongside the HMRC guidance.
The Treasury direction contains this key paragraph:
“Integral to the purpose of CJRS is that the amounts paid to an employer pursuant to a CJRS claim are only made by way of reimbursement of the expenditure incurred or to be incurred by the employer in respect of the employee to which the claim relates whose employment activities have been adversely affected by the coronavirus and coronavirus disease or the measures taken to prevent or limit its further transmission.”
This wording appears to confirm that the employer can use the furlough scheme for the payment of wages for employees whose employment activities have been adversely affected by Covid-19. This includes where they cannot work or where they are taking measures, like self-isolation, to limit the transmission of the disease.
Chris Kisby is an employment partner at Gateley Legal