Furloughed scheme update announced 4th April

The Government has, as of Saturday 4 April, published further details regarding the Coronavirus Job Retention Scheme (“Furlough” Scheme). Below is an outline of the key points from the updated guidance.

  • Employees who have been dismissed for any reason since 28 February 2020 can be re-hired and placed on furlough. The original guidance only made reference to employees who had been made redundant and has now been broadened to encompass anyone dismissed for any reason.
  • Employees must be furloughed for a minimum of 3 consecutive weeks. When they return to work they must be taken off furlough. Employees can be furloughed multiple times but each separate time must be for 3 consecutive weeks.
  • Employers must notify their employees of their furlough status in writing and keep a record of the written notification for 5 years.
  • Employees cannot work for the employer during the period of furlough leave. They can, however, work for a different and unconnected employer during this time i.e. take up a second job assuming their employment contract allows for this. If not, they’ll need consent from their employer.
  • An employee with multiple employers can be furloughed by more than one employer at the same time and, in that case, each employer can pay the worker up to the maximum of £2,500 at the same time.
  • Employees will still have the same rights that they would have whilst working, including:
    • Statutory sick pay;
    • Maternity and other parental rights;
    • Rights against unfair dismissal; and
    • Redundancy payments.

Grants cannot be used to substitute redundancy payments.

  • The grant paid to the employer is included within the company’s taxable profits for income tax or corporation tax purposes. It is not clear whether the grant is taxable on an employer who is not currently trading. The gross salary, associated National Insurance Contributions and pension contributions continue to be tax deductible in the usual way. The employee will be taxed on the salary paid by the employer as usual.
  • Employers can claim for any regular payments that they are obliged to pay to employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonuses (including tips), commission payments and non-cash payments should be excluded from the pay calculation.
  • Company directors can be furloughed. Where furloughed directors need to carry out particular duties to fulfil statutory obligations that they owe to the company, they may do so provided that they do no more than would be reasonably judged necessary for that purpose. For instance, they should not do work that they would carry out in normal circumstances to generate commercial revenue or provide services on behalf of the company. The ‘statutory duties’ of a director are not specifically outlined and therefore it is not clear what these duties entail but it is understood that they will be interpreted narrowly under the scheme.

It is expected that the scheme will be up and running by the end of April. There is no further information regarding this at this time only that the portal is currently being built from scratch. We will post any further information/updates as they are announced.

This information is accurate and up to date as 6 April 2020.

Please contact Sarah Collier on scollier@kbl.co.uk with any questions or queries in relation to the furlough scheme or otherwise.