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Updated Job Retention Scheme Guidance Provides Clarity on Uncertain Areas

on Thursday, 09 April 2020.

On 4 April 2020, the government issued updated guidance clarifying some of the finer detail of its job retention scheme.

The job retention scheme is an unprecedented scheme currently in development, with the HMRC portal expected to be up and running by the end of April.

The updated guidance clarifies that - 

  • Employees can be furloughed multiple times, as long as each furlough period lasts at least three weeks. This means you can choose to rotate staff between furlough and working status if you wish.

  • Casual staff engaged as 'workers' can be furloughed as well as employees, providing they were paid through PAYE and on the payroll on 28 February 2020.

  • Agency workers employed by an agency can be furloughed by the agency.

  • Employees should be notified in writing that they are to be furloughed and a copy of the letter should be retained for 5 years - where it is proposed that employees' pay is reduced during furlough then they should be asked to agree to this.

  • Fixed term contracts can be extended in order to place employees on furlough. Although please note the usual employment law considerations would apply, such as the accrual of the right not to be unfairly dismissed if, due to the extension of the fixed term, the employee were to reach two years' service.

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  • Employees made redundant or who stopped working for you on or after 28 February 2020 can be re-hired and then placed on furlough leave. Our understanding is that the decision as to whether to re-hire staff in this way is the employer's alone, and there is no general obligation to re-hire employees. Consideration will need to be given to the longer term employment law implications should staff be re-hired.

  • Subject to the contractual arrangements in place, employees can start a new job with a different employer during furlough leave. The fact that they have been furloughed from another employment will be captured as part of their new starter information for payroll purposes, and so it is unclear if this will impact on the reimbursement of their pay, to avoid them earning 80%-100% their original salary and 100% of a new one.

  • Employers can claim for regular payments they are obliged to pay employees including 'compulsory commission' payments. We interpret this to mean contractual commission can be claimed under the scheme, but discretionary commission cannot, but this will be subject to the £2,500 cap.

  • The reference salary claimed under the scheme should not include the cost of non-monetary benefits, such as the value of health insurance or a company car.

  • Company directors can be furloughed and can perform statutory duties during furlough leave.

Further Considerations

The updated guidance still leaves some important questions unanswered, including whether annual leave can be taken during furlough leave. Our view is that until the government states otherwise, annual leave can be taken in the normal way during a furlough period (statutory leave would be paid at the full normal rate of pay). We expect the government to confirm the position in respect of annual leave in due course, and will provide a further update when the position is confirmed.

The guidance also does not explicitly address employees who have two contracts with the same employer for different roles. The guidance does state that furloughed employees must not provide services or make money for an organisation whilst furloughed and so the risk free approach based on current guidance would be either to furlough both or neither of the roles.


 For specialist legal support with any of these issues, please contact Alice Reeve in our Employment Law team on 07741 271 363, or complete the form below.

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