There have recently been more furlough scheme amendments since it was recently announced that the Job Retention Scheme is now extended until 31st March 2021.
From this, there have been a flurry of questions about details, in particular relating to furlough.
With the Christmas and New Year break rapidly approaching, further guidance has been issued. This is to help employers and employees understand how furlough will work in relation to holidays.
There is also clarification on other types of leave and employment status.
Here’s our latest Q&A to cover the new points of the furlough scheme amendment
Q: Can an employee take holiday whilst furloughed and what are the implications for payroll/salary?
A: Yes. However, the furlough arrangement and agreement must be in place first. As the employment contract is still in place employees are entitled to their contractual annual leave. If there is no contractual agreement, then the statutory minimum continues to apply. These holiday days/hours can be claimed through the furlough scheme. BUT, for any days that the employee takes as holiday whilst on furlough, the employer MUST make up pay to 100%. This is if they aren’t already doing so.
Q: Can an employer insist on an employee taking holiday whilst furloughed?
A: In some contracts there is a stated policy that a fixed number of days must be taken at certain times of the year, eg. between Christmas and New Year. As the contract is still in place this would not change where the employee is furloughed. In this case, pay would have to be made up to 100% for the days in question. If there is no contractual agreement covering Bank Holidays, this can still be covered by furlough. But remember that Bank Holidays are statutory. An agreement would be needed for the employee to take the paid holiday at another time later in the year.
Where there is no contractual agreement of any kind, the employer can enforce annual leave. This is in accordance with Government guidelines issued in May 2020. An organization may have a policy of restricted or no annual leave carry-over into a new holiday year.
This must be discussed with those employees with too much annual leave to take before the end of the holiday year.
There is now a law that says that:
‘Employees who cannot take annual leave for reasons related to Covid-19 can carry over their leave for the next 2 holiday years.’
It’s important that employees take holiday, for reasons of both physical and mental wellbeing.
But that might not always be possible. In that case the parties should try to reach an agreement about how to ensure that there is an acceptable and fair balance.
Q: Can an employee be put on furlough to cover a period of annual holiday?
A: No. The furlough must be in place before the request for annual leave is considered. Otherwise, this is an abuse of the scheme. It could result in the employer having to repay the furlough grant to HMRC.
Q: Can an employer ‘buy out’ untaken holiday entitlement?
A: Only if it is over and above the statutory minimum. Within the statutory minimum ‘pay in lieu’ would not be lawful.
Other Periods of Leave
Q: Can employees returning from family related statutory leave be furloughed? What will be their furlough pay?
A: Yes. Family-related statutory leave includes maternity leave, paternity leave, shared parental leave, adoption leave, parental bereavement leave and unpaid parental leave.
For employees on fixed pay, claims for full- or part-time employees furloughed on return from family-related statutory leave should be calculated against their salary before tax, not the pay they received whilst on family-related statutory leave.
The same principles apply where the employee is returning from a period of unpaid statutory family-related leave.
Q: Can an employee on family related statutory leave return early from that leave in order to be furloughed?
A: Yes. This is a recent update. Original advice stated that family-related leave originally required 8 weeks’ notice of return (where the leave was long term).
This has now changed to confirm that those on maternity and parental leave can return with less notice, although the actual period of notice has not been stipulated beyond ‘early’. It will be up to employers to discuss and agree with the employee what the notice of return can be.
Q: Can an employee returning from sick leave be put on furlough?
A: Yes, but the employer must be sure that the employee is fit to return. This should be confirmed by a fit note from his/her GP if the employer is not certain that the employee would have been ready to return to paid work in normal circumstances.
Q: Can an employer continue to claim the JRS grant for furloughed employees who have resigned and are service a notice period?
A: Not after 1st December 2020. This is another amendment to the advice given in early November. This applies to both contractual and statutory notice. It will particularly affect those who have resigned and those who have given notice of retirement.
This also applies to notice being served due to redundancy. The employee can still claim the JRS furlough grant during the redundancy consultation period. This does not apply for the notice period once the consultation is completed.
The employer can agree to pay the employee for his/her period of notice beyond 1st December. Alternatively, they can place the employee on ‘garden leave’, but both options will be fully self-funded by the employer. If these are not an option, there is a possibility that the employee could claim statutory guaranteed pay under the government scheme.
Employers should bear in mind that there are risks in any redundancy situation for furloughed employees. The furlough scheme was intended to prevent redundancy. A tribunal might ask ‘why make the redundancy in the first place when furlough was available?’
Whatever action is taken, ‘reasonableness’ will be a major issue. This is if a case goes to tribunal for unfair dismissal or any other reason.
Other Furlough Scheme Amendments
The other major back issue from 1st December 2020 is that HMRC will be issuing a list of all employers who have made a claim under the furlough scheme from 1st December 2020 onwards. This information will also be available to employees in their personal online tax file.
Exception will be granted if an employer can show that there is a serious risk of violence or intimidation to certain individuals. As yet there is no guidance on how to claim for exemption and what evidence would be required. This is due to be published shortly.
We have plenty of other resources on our blog! These are regarding furlough, furlough scheme amendments and the effects of COVID on the workplace and people.