Legal

Key questions about the furlough extension

27 May 2020 By Helen Watson

Following the announcement that the coronavirus job retention scheme will now run until October, Helen Watson answers important queries for employers

Do the normal employment rights continue under furlough? 

Yes, employees will have the same rights under furlough leave, including (but not limited to) statutory sick pay, maternity rights, other parental rights and the right not to be unfairly dismissed.

What about zero-hours workers, flexible contracts and agency workers?

The coronavirus job retention scheme is designed to support workers who are on the PAYE system. Therefore, regardless of the contract someone is engaged under or their working arrangement or pattern, they could be eligible if they are on the PAYE system. This includes casual, flexible, zero-hours and agency workers.  

Could you temporarily take an employee off furlough and then put them back on again if they are needed to come in but not on a full-time basis when businesses start back up again? 

Provided an employer puts an employee on the furlough scheme with agreement for a minimum of three weeks then the employee can come off the scheme at any time after that and then go back on it, again for a minimum three-week period. 

The scheme is set to change in August to allow employees back into the workplace on a part-time basis while remaining on furlough. Until then, employees on furlough cannot work for their employer. They can work elsewhere during furlough, however, with their employer’s agreement.

If we need to go through the redundancy process, can the notice period be covered by furlough? 

While the scheme is designed to support businesses in bringing employees back to work after furlough leave, if this is not possible, then employers can make redundancies during or after furlough leave. If an employee is made redundant during furlough leave the employer would not be eligible for further grant payments for that employee.

Employers must still follow normal redundancy policies and procedures (albeit virtually) if they wish to make employees redundant, including furloughed employees. This includes consultation requirements, redundancy payments and notice.

While notice is not specifically dealt with in the guidance, it is likely that notice can be given during furlough but it is likely to be necessary to top up from 80 per cent to 100 per cent of the employee’s pay as you should with any holiday pay during furlough.

If redundancy is a real possibility at the end of furlough but not certain, what is best practice for communicating this to employees. What are the risks in doing this? 

While some employers may have thought that they needed to make redundancies at the end of June when furlough was initially thought to end, there is now a lifeline until the end of October, which means many anticipated redundancies can be avoided. It is best to always advise staff that redundancies, along with other options that ensure the business remains viable, will remain under review.

We have made our first claim through the HMRC portal for our furloughed workers. We have employees who we made redundant in March that we may want to bring back under the furlough scheme. Will we be OK in our second claim to HMRC to backdate to March for those workers?

There is an ability to bring back employees who were made redundant before the furlough scheme was announced and there is an ability to claim back, but this would need to be reviewed on a case-by-case basis because of payments that may have been paid/received by these employees in the interim.

Can employees on furlough take annual leave and, if so, what pay should they receive? 

The latest government guidance confirms that employees can take annual leave while on furlough leave. Recent government guidance in respect of holidays suggests that this would not interrupt the minimum three-week furlough leave period.

The guidance confirms that if a worker takes annual leave while on furlough, they should be paid at their normal rate of pay or, where their rate of pay varies, calculated on the basis of the average pay they received in the previous 52 working weeks (in accordance with the Working Time Regulations). Employers will be obliged to pay anything above the capped 80 per cent wage not recoverable under the scheme. Alternatively, the furlough agreement may agree to vary holiday pay entitlement.

If a worker usually works on a bank holiday, the employer can agree that this is included in the grant payment. If the worker usually takes the bank holiday as leave, the employer would either have to top up their pay to their usual holiday pay or give them a day’s holiday in lieu.

Can staff refuse to return? 

If an employee does not wish to attend work because of fears of coronavirus then the employer should listen to their concerns. Acas guidance states employers must try and resolve genuine concerns, with a view to protecting the health and safety of staff. While an employee may wish to arrange unpaid leave or holiday leave, employers have discretion to agree any holiday dates subject to any contractual or policy terms. If an employee refuses to attend work and their employer does not agree to time off it may lead to disciplinary action.

However, regard should be given if an employee has a compromised immune system, if they are pregnant or if they are over 70, as they will be particularly vulnerable to infection. In these circumstances extra precaution would be needed as it would with any sick employee who is self-isolating or in a house with someone self-isolating. 

Helen Watson is a partner and head of employment at Aaron & Partners

Deputy Director of People, Culture & Transformation

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