On 4 April 2020, the UK government published updated guidance on the coronavirus Job Retention Scheme (JRS). It provides welcome clarity on some issues, but leaves significant uncertainty in others. For our update on the original guidance, see here.
Clarified points and new information:
- Re-hires: we already knew that employers could re-hire employees who had been made redundant since 28 February 2020, for the purpose of putting them on furlough and claiming the JRS grant. It is now confirmed that this option is available for all former employees, whatever their reason for departure.
- Pay elements covered by the JRS: contrary to the original guidance, commission can now count towards the reference salary used to calculate the 80% JRS grant (still capped at £2,500 a month), provided it is "compulsory", as can "fees". Neither term is explained further. It would seem that compulsory commission covers a contractual entitlement, but whether it includes all forms of contractual commission schemes is unclear. Non-cash benefits (e.g. a car) are not covered. Entitlement to benefits would remain unless varied in a furlough agreement.
- Company directors: they can be furloughed. The no-work rule continues to apply, but the guidance confirms the view that the director can still perform their statutory duties, provided they do no more than would reasonably be judged necessary for that purpose.
- Repeat furlough: the guidance confirms that employees can be furloughed, brought back to work and then re-furloughed multiple times. The only requirement from a JRS grant perspective is that each period of furlough lasts for a minimum of three weeks. Separately, the employer will need to ensure its furlough agreement permits this on / off arrangement.
- Record-keeping: the guidance now states that employers must notify employees of their furlough status in writing and keep the record of that written notification for five years.
- Second job: furloughed employees are permitted to take on new employment while furloughed (with a different, non-associated employer), without jeopardising their main employer's entitlement to a JRS grant. Employees should comply with any existing provisions about second jobs in their employment contracts. Employers may also want to include provisions in their furlough agreements, for example confirming that the employee must be able to return to work immediately upon furlough ending
Remaining grey areas
The guidance has many grey areas, no doubt due to the break-neck speed at which the government is having to roll-out the JRS. Two key areas of difficulty are holiday and sickness:
- Holiday: The JRS guidance still fails to address the interaction between the JRS grant and furlough, on the one hand, and holiday and holiday pay, on the other. Recent, non-binding guidance from Acas has contradictory statements about whether it is possible to take holiday while on furlough. The approaching Easter public holidays throw this issue into sharp relief. For working time purposes, public holidays are treated like normal holiday. It seems unlikely that the government intended the Easter public holidays to break a period of furlough where most employers who are furloughing will not yet have completed the minimum initial 3-week period of furlough. This is a complex area which we would be happy to assist with.
- Sickness absence: it remains unclear whether an employee can be on sick leave and on furlough, or whether the JRS will cover sick pay costs. From a practical perspective, many furloughed employees may simply omit to notify their employer that they are unwell, given that they will have already ceased working.