COVID-19 & Furlough Leave – An Update

COVID-19 & Furlough Leave - An Update

As part of our ongoing updates to our clients regarding the Coronavirus Job Retention Scheme and more particularly the furloughing of employees, the Chancellor of the Exchequer Rishi Sunak has now issued a formal Direction to HMRC.

The Direction requires HMRC to be responsible for the payment and management of amounts to be paid under the Scheme.

Points to be covered in this article

A Formal Direction to HMRC

There have been various amendments to the previous guidance, but as this is a formal Direction from the Treasury, it is more likely than not to be taken as a ‘definitive guide’.  Of particular significance is the extension of the previous cut-off date for eligible employees. Previously this was the 28th February 2020.  This has now been extended to the 19th March 2020 which means that any employees who were registered on your PAYE payroll as of the 19th March 2020 will be eligible to be furloughed. The cut-off date is in place as an anti-fraud measurement so that unscrupulous employers do not make up or create bogus employees to then make a claim. This will be of particular relevance for employees who may have recently changed roles and it is thought that this change will mean that a further 200,000 employees could be potentially eligible under the Furlough Scheme.

HOWEVER, please note that there is a distinct and fundamental difference between being employed as of the 19th March, and the employer having submitted the real time information payroll data on PAYE by that date. If you pay your employees at the end of the month it may be that the submission on PAYE had not been made by this date, so please do check with your payroll administrator.

Directors & Furlough Leave

We previously advised you that a Director could be furloughed but that they could undertake statutory duties.  There was some confusion as to what ‘statutory duties’ mean, but the Direction confirms that statutory duties have a very narrow interpretation and would only apply to obligations arising from an act of Parliament only, so for example filing company accounts. If a Director or indeed any furloughed employee undertakes any work or performs any services for the employer whilst furloughed they will be in breach.

Do you have any questions about furlough leave? 

Contact us today.

Written Agreement to be Furloughed

In our previous articles we advised you that it is important to get the employees agreement to be furloughed, not least because by furloughing the employee you would be amending the Contract of Employment by changing their status, and potentially their earnings if as an employer you choose not to top up the extra 20%.  Whereas previously the guidance indicated that employers were only required to notify employees that they should cease work, the Direction now makes it clear that this must be by means of a written agreement.  This could of course be achieved by asking an employee to perhaps sign a duplicate copy of a letter confirming the contractual changes and confirming the employees change of status as being a furloughed employee.

Moving Forward

Given the unprecedented need to create the Coronavirus Job Retention Scheme to try and combat the effects COVID-19 could have on the economy, and the speed within which the Coronavirus Act 2020 was passed, it will come as no surprise that there continues to be uncertainty around various matters concerning the Scheme.  This is clearly a very fast moving area of law, and we will continue to keep you updated. To ensure you receive updates directly to your inbox please email insight@goughs.co.uk to be added to our mailing list.

If you have any queries regarding the Coronavirus Job Retention Scheme or the furloughing of your employees or indeed have any other employment queries, then please do not hesitate to contact a member of our Employment Team who will be on hand and happy to assist.

 

Article by Angela West

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