This Direction sets out the rules of the Job Retention Scheme. Most of these rules reflect what has already been set out in the Guidance to date but there are some notable changes.
The Direction carries heavier legal weight than the Guidance provided to date and so it is expected that where there are differences between what is set out in the Guidance and was is provided for in the Direction, the Direction trumps the Guidance.
The final piece of the puzzle will be the legislation itself which has been expected for a number of weeks now. Amendments can be proposed as the legislation is being enacted and so there is still the possibility of further change. It is vital that you check the most up-to-date position when making decisions on furlough and the Scheme.
Which employees can I claim for?
The Scheme applies to employees who were on the PAYE payroll on the 19 March 2020.
This is a significant change to the previous date, 28 February 2020, and may have an impact on decisions to re-hire employees who had resigned and fell into a limbo period where they were ineligible for the scheme with their new employer.
Does there need to be a redundancy risk?
No. Employers can furlough their staff “by reason of circumstances arising as a result of coronavirus”. This means that an employer does not need to contemplate making redundancies. Instead, they can instruct their employees to cease work due to the impact from the COVID-19 pandemic.
If I instruct my staff not to work, is that sufficient?
No. It is necessary that there is an agreement in writing with the employees that they have been instructed to cease working. This can be by way of e-mail but this agreement may be key to eligibility under the Scheme. It may not be possible to rely on an implied agreement. However, the Direction does not require that the written agreement pre-dates the period of furlough so it should still be possible to get written agreement from the furloughed employees.
If you have already sought agreement from the employees, it may be necessary to revise this so there is an explicit acceptance by the employee of the instruction to cease working.
I have staff on sick leave. Can they be furloughed?
The most recent Guidance suggested a relaxation in this regard, allowing an employer to furlough employees on sick leave for business reasons. The Direction, however, is not as relaxed. It states that where an employee is instructed to cease work and Statutory Sick Pay (SSP) is payable, the furlough period does not commence until the period of SSP has ended. This may create a difficulty for those with long running fit notes.
What about annual leave?
One of the main issues which has not been answered is around annual leave and whether an employee can take a period of annual leave while on furlough. Neither the Guidance nor the Direction refer to annual leave and so this is a question which remains unanswered, creating risk for an employer. Although there is still an opportunity to address this in the legislation, one would expect that HMRC (who this Direction is for) would also be informed on the position they should take on annual leave.
If you have any questions about Furlough Leave which are not covered above, please do not hesitate to contact a member of our specialist Employment Law team.
