Furlough - the basics and some difficult bits

As most readers will be aware, furlough is special leave introduced by the Government to enable employers to retain staff who are unable to work during the pandemic. Any employer in the country is eligible for the scheme provided that it had a PAYE scheme in operation on 19th March. Employers can claim 80% of the employee’s normal pay, up to £2,500 per month, under the Coronavirus Job Retention Scheme (CJRS). Employers should continue to pay normal pay wherever possible. The Government has produced guidance on furlough, and at the time of going to press, there have been 6 versions of this guidance together with a Treasury direction which in some respects conflicts with the guidance.

Employees must consent to being placed on furlough and there should (this is the subject of some debate) be a written agreement. Employers can face claims of breach of trust and confidence, or discrimination, from either people who are not furloughed, but want to be, or from those that are, and miss out on pay because the employer is not topping up. It is suggested in some quarters that the issue of who to select to place on furlough should be similar to those methods employed in selecting for redundancy.

Some difficult bits

• Annual leave:surprisingly, the direction is completely silent on the question of annual leave. However, from the guidance and other sources, the following principles can be gleaned:

1. Employees continue to accrue annual leave as normal during furlough.
2. Employees can take holiday during furlough and they must be paid as they normally would for holidays. Employers are entitled to be reimbursed via the CJRS for holiday pay up to 80% or £2,500 cap.
3. Employers can force employees to take their holidays during furlough provided that they comply with the usual notice requirements, namely 2 days’ notice for every day of leave.
4. It is not currently clear whether taking holiday would interrupt the minimum 3 week period of furlough.
5. The Working Time (Coronavirus) (amendment) Regulations 2020 amend the rules on holiday to permit a worker to carry over 4 weeks leave into the next 2 leave years. This only applies where it is not reasonably practicable for a worker to take some or all of their holiday in the original leave year. This is likely to cause some arguments between employers and employees as to whether they can carry over, or whether they should be forced to take leave in the relevant leave year.

• Sick leave:it is at the discretion of the employer as to whether employees who become sick whilst on furlough remain on furlough at their furloughed rate of pay or move to SSP. Employers cannot claim for the furlough salary if they move an employee onto SSP. The guidance confirms that people on long term sickness absence can be furloughed. This means that if an employee is on furlough and becomes sick, then they are better off simply not telling their employer that they are sick, and one wonders why they would in the first place.
• Maternity leave:the normal rules for maternity pay and other forms of parental leave still apply. An employer can furlough an employee on maternity leave but must continue to pay them their contractual statutory maternity pay at the rate they are entitled. Rather bizarrely, an employee on maternity leave could choose to end this in order to take advantage of receiving 80% of salary under CJRS (if their maternity pay is less than that) but would need to be aware that if the furlough scheme is ended by the Government they cannot then go back onto maternity leave This may be a question which those currently on maternity leave are considering especially if they only receive SMP.

We will continue to bring you further updates on furlough as they arise.

For advice on this or any other employment matter please contact Paul Grindley at PaulG@winstonsolicitors.co.uk or call Winston Solicitors on 0113 320 5000