We are now at the fifth iteration of Government guidance for employers, which not only confirms that the Scheme will be extended to the end of June 2020, but also covers the following:
- Employers must confirm in writing to their employees that they have been furloughed, and that ‘if this is done in a way that is consistent with employment law’ then that will constitute valid consent for the purpose of the scheme. The guidance goes on to say that ‘the employee does not have to provide a written response’. This would be helpful clarification if it were not at odds with what it says in the Treasury Direction, published on 15 April. The Direction states that an employee can only be furloughed for the purpose of the Scheme if the employer and employee ‘have agreed in writing (which may be in an electronic form such as an email) that the employee will cease all work in relation to their employment’. In addition, generally confirmation of agreement is required to change an employment contract. So it remains unclear whether or not employees have to have specifically agreed in writing to being furloughed.
- New guidance on the issue of annual leave during furlough which confirms our view that employees will accrue annual leave while on furlough and that they can take their holiday during furlough. Employers will, however, have to top up holiday pay to employees’ usual holiday pay in accordance with the Working Time Regulations.
There are also two new helpful guidance documents. One, is a ‘step by step’ guide which explains the information that employers need to provide to claim for their employees’ wages, with detailed examples. The other is a guide to calculating 80% of your employee’s wages, National Insurance Contributions and pension contributions if you have furloughed staff. This guidance covers which payments you should take into account when calculating 80% of your employees’ wages which is said to include regular wages, non-discretionary overtime, non-discretionary fees, non-discretionary commission payments and piece rate payments. It further explains which payments you cannot include namely payments made at your discretion where you were under no contractual obligation to pay, including tips, discretionary bonuses, discretionary commission payments, non-cash benefits and other non-monetary benefits like benefits in kind (such as a company car) and salary sacrifice schemes (including pension contributions) that reduce an employees’ taxable pay.
We are in the process of considering the implications of the latest guidance and amending our FAQs to include it.