The Government has published another update to its furlough scheme on the 4th April.
Many businesses are having to make unenviable decisions on how to keep their businesses going while still retaining their workforce at this difficult time. There were a number of points in the furlough scheme which were unclear which the Government has sought to clarify in its latest guidance.
The central points are as follows :-
- Employees can begin a new job when on furlough so effectively they could get 100 per cent of their salary. Also if an employee has two jobs they can be furloughed for one job and still continue working for another employer. Employees must remember that if they do start a new job while furloughed they need to check if their contract of employment permits it and if not, then ask their employer to vary the contract preferably in writing. Most employers are likely to agree to any changes because they will want to retain their workforce in these difficult times;
- Company directors can be furloughed if they are employees of the company. Company directors can carry out two functions, firstly as a statutory director where they have to comply with their duties under the Companies Act and secondly any duty as an employee to generate commercial revenue for the firm which involves the day to day management of the organisation. If they decide to be furloughed as an employee then they won’t be able to do anything which generates a revenue but will be able to do tasks which comply with their duties as a statutory director such as filing company accounts. A non-executive director would not be permitted to be furloughed as they are not an employee of the company. The Government needs to consider providing more guidance for directors as to their position as it is not always clear as to how a person is operating in these two roles;
- There have been questions about whether the 80 per cent payment from HMRC will include non-monetary benefits such as private health car or a car. The current guidance is that it does not include these types of benefits;
- It wasn’t clear in the previous guidance whether employees needed to be notified in writing about being furloughed but this has been rectified and the current guidance is that employees do have to be notified in writing. Also the information about the furloughed employees being notified has to be retained by companies for five years and it will be important for companies to keep a paper trail of how they have furloughed employees as HMRC is likely to go through this in detail later on in terms of recouping any monies where businesses have not been complying with the guidance;
- There is a provision in the current guidance that employees can be furloughed multiple times which is good news for businesses because if their work picks up then they can bring employees back into the business and rotate employees so they don’t feel isolated. However an employee has to be furloughed for a minimum of three weeks and would have to be brought back into the business after this initial period. This can be a very unsettling period for a lot of employees, not knowing if they will have a job at the end of the period and wondering if they will have to face redundancy;
- An employer can claim 80 per cent of compulsory commission payments, presumably meaning contractual commission as well as basic salary. This means that where employees have outstanding commission owing they will still be able to claim but will not be able to obtain commission payments for sales during the period they are being furloughed;
- Employees can still accrue holiday while they are being furloughed. This may lead to further problems for employers later on that they have a lot of employees wanting to take their outstanding leave when they return to work.
If any business needs assistance in navigating their way through this guidance please do get in touch as we are here to help.
To speak with Jane directly about this or any other employment-related matter, please email JZC@hartbrown.co.uk or call 01483 887766.
This is not legal advice; it is intended to provide information of general interest about current legal issues.