Commercial Law

Furlough Leave - Update 20th April 2020

April 20, 2020

At the end of last week some very important updates were announced with regard to furlough leave, including a Treasury Direction to HMRC, which demonstrate just how much the subject is evolving and changing rapidly. You need to keep up to date with all the latest guidance and some key changes are as follows:

  1. The coronavirus job retention scheme (aka ‘furlough leave’) has been extended from 31 May 2020 to the 30 June 2020, with of course a further extension very much a possibility. Potentially this extension comes about as large businesses would have needed to start the 45 day collective redundancy consultation period at the end of last week. The fact the ‘lockdown’ has been extended for a further 3 weeks is probably another contributing factor.
  2. Both the employer and the employee must agree in writing to the employee being furloughed. Previously only written notification needed to be sent to the employee, but now a positive step has to be taken by the employee to confirm his/her agreement in writing. For employees already on furlough leave it remains to be seen what if anything employers can do to protect their position.
  3. Employees who were employed on 19th March 2020 (previously 28 February 2020) are now eligible to be placed on furlough leave provided the employer had submitted real time information payroll data by that date.
  4. When placing an employee on furlough leave it is not necessary to show that it was for the purposes of avoiding redundancy. It just needs to by reason or circumstances connected with the coronavirus.
  5. The most recent guidance confirms it is now possible to take annual leave whilst on furlough leave with the employer having to top up pay up to 100%. There is nothing though on whether an employer can compel an employee to take holiday whilst on furlough leave.
  6. The HMRC portal went live today allowing employers to claim up to 80% of employees salaries.
  7. At the beginning of last week a High Court Judgment was handed down involving the administration of Carluccio’s and the furlough scheme. The Judge confirmed in his view the administrators were eligible to access the scheme on behalf of the company’s employees as there was a prospect of the business or parts of it being sold. It is also of note the fact the administrators wrote to the employees stating they would only be able to pay the sums due under the scheme once payment had been received from the Government. The overwhelming majority of the employees accepted the variation to their employment contracts presumably because they had little alternative.

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