Coronavirus Job Retention Scheme furlough rules need clarification

On 26 March the UK government published its official guidance for the Coronavirus Job Retention Scheme, but it has caused some confusion for employers

Businesses which furlough employees can claim National Insurance payments, minimum pension contributions and up to 80% of wage costs from the government.

The latest guidance included the confirmation that to be eligible for furlough employees must have been on payroll since at least 28 February 2020.

Employees made redundant after 28 February and subsequently rehired are also covered, with wage costs covered as a grant rather than a loan.

Yet the rules still leave room for further explanation, according to London law firm RPC.

The ability to rotate employees on and off furlough, the coverage of workers paid via pay-as-you-earn tax (PAYE), and whether furloughed employees may work for another organisation are some of the grey areas the firm said need further clarification.

Kelly Thomson, legal director at RPC, told HR: “It is important for employers to take advice on the risks and options before pressing "go" on any furlough plan.

“Though the government's Job Retention Scheme is designed to support employers whose operations have been severely affected by coronavirus, it is unclear whether employers will have to demonstrate their specific difficulties in any way other than the fact they have furloughed employees who are, therefore, not doing any work.”

“What the guidance doesn’t cover is whether workers on furlough may take holidays, so further advice on this issue by the government will be necessary in the coming weeks.”

Patrick Brodie, partner at RPC, also pointed out that employees may be permitted to rotate off and on furlough, “provided each furlough period is a minimum of three weeks.”

He said: “The guidance says that each job is treated separately, an employee could be furloughed from each job and that the cap applies separately to each employer. It is not clear if this would allow working for group companies, under a separate employment contract but suggests that furloughed employees could work for another organisation.”

Becky Woodhouse is CEO of PURE Spa & Beauty and one of the thousands of employers faced with the challenges outlined in the new guidance.

Speaking to HR magazine, she said: “From my own experience of starting the furlough process for 200 employees, it is a complex issue – however it can be fairly straightforward if you are careful at following employment law and your employment contracts.”

Her recommendation for other employers going through the process is “opening up dialog with all employees immediately.”

She said opening up the payroll email to questions about the process proved successful for her business.

“By day three we had no more questions and agreement to be furloughed from 100% of our employees,” she added.

Further reading:

HR leaders revising pandemic procedures

Government to pay workers’ wages during Coronavirus pandemic

Self employed workers need HR support

Workers at risk because of ‘essential job’ confusion