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24th April 2020

Legal Issues – Coronavirus Update

In the unusual world we are all now operating in dealing with coronavirus, changes happen on an almost daily basis and that only adds to the difficulty of managing the challenges faced by employers.  While many of the basic principles of furlough are now known to most employers, several issues have been changed or clarified over the last week.  To try and assist, we thought it would be helpful to set those out in general terms and have them in one place for ease of reference.

  • HMRC Portal – from Monday (20th), the HMRC portal for making applications for grants to cover furlough pay for employees was successfully launched.  Despite concerns about how it would operate and one or two stories of some teething problems, we are delighted to confirm that the launch went smoothly and lots of employers have been able to apply.  As an indication of the scale of the operation (and huge credit is due to HMRC for pulling this together so quickly), on Monday alone 185,000 businesses submitted claims involving 1,300,000 employees reported as being on furlough leave and with a total value of claims in excess of £1.5bn.
  • Holidays during furlough leave – although the timing of the release was interesting (late Friday afternoon when many people were switching off for the weekend), HMRC finally confirmed at the end of last week that employees can now take holidays when on furlough leave and doing that will not interrupt the period of furlough leave or jeopardise the grant.  On a related note, it was also confirmed that employees on holiday during furlough leave are entitled to normal pay (i.e. 100%) rather than furlough leave pay (i.e. 80%).  Although that is clearly a challenge for processing payroll, it is good news for employees and should help employers in any discussions with employees about taking holidays now to avoid any backlog later in the year.
  • Furlough Leave Agreement – after much confusion about agreeing furlough leave with employees, matters have finally been clarified.  Initial confusion arose because of the conflict between the advice set out in the Government guidance (i.e. written response not required) and the terms of the Treasury Direction (this being the only view with a formal legal status) which suggested the opposite.  For the benefit of all employers, the good news is that while employers must still confirm to employees in writing that they are on furlough leave and the terms of that leave (and retain that record for a period of 5 years), it is now clear that there is no need for employees to respond in writing confirming that they accept that position and agree to being on furlough leave.   Helpfully we now have a clear and unequivocal statement from HMRC that they will not deny an employer the ability to reclaim funds simply on the basis the employer had not obtained written agreement from the employee to cease all work for the employer.
  • Statutory Sick Pay – two changes have been announced this week:
    1. HMRC has updated its statutory payments guidance manual to make it clear that employees do not qualify for SSP if they are on furlough;  and
    2. The Government has released Regulations (effective from 16 April 2020) clarifying that a person is deemed to be incapable of work if they are unable to work because they fall within the extremely vulnerable category and have been advised to shield.

If you have any questions on any of the issues mentioned in the above article, please contact Russell Eadie.

24th April 2020