Yesterday the government made a further update relating to furlough and holiday as well as an extension to the Coronavirus Job Retention scheme.

Since the furlough scheme was announced in March 2020 we’ve been providing regular updates on furlough leave, and the guidance which the government has been issuing. We’ve also become accustomed to the guidance being updated on a Friday night – so I think the government official who is drafting it must issue it just before he goes home for the weekend, leaving the rest of us having to get to grips with the update over the weekend!!!

Furlough and holiday Scheme Updates

This Friday was a bumper day for furlough and holiday related announcements. This blog explores the three updates which have been issued.

Extension of Furlough Scheme

When it was originally announced, the furlough scheme was due to come to an end on 31 May 2020. This has now been extended to the end of June. This is not surprising, following shortly after the government announced the extension of the lock down for a further 3 weeks. Read the Chancellor’s announcement on the furlough scheme extension. 

Furlough and holiday

In the previous updates to the guidance, one issue which wasn’t addressed, and about which employers were asking for clarity, was the interaction between furlough leave and holiday and in particular whether employees could take holiday whilst on furlough. This latest update to the guidance has now provided some of the answers, but not all. Read the updated guidance on furlough and holiday leave for employees.

The updated guidance now confirms:

• employees can take holiday whilst on furlough;
• that employees continue to accrue holiday whilst on furlough. This is not surprising, and is what most people thought anyway;
• as part of the agreement to go onto furlough, employees can agree a reduction in their holiday entitlement. However, employees cannot agree to reduce their holiday entitlement below the 5.6 weeks of statutory paid annual leave each year;
• when on holiday, employees are entitled to be paid at their normal rate of pay. Employers will still be able to reclaim the 80% under the furlough scheme, but will then have to top up the employee’s pay to their normal (100%) rate of pay;
• the government has also clarified the position with regard to bank holidays. If employees normally have bank holidays off, the guide says that the employer will either have to top up the pay to the usual rate of holiday pay, or give employees a day of holiday in lieu. Therefore, for the recent Easter weekend, if employers want the bank holidays to still be treated as holiday, then they should make sure that they top up the pay of their employees to normal pay for those two days, but only claim back the 80% under the government scheme.

The updated guidance answers many of the questions which employers had about holiday. However, the big question that it doesn’t answer is whether an employer can require an employee to take holiday.

As said in our previous blog “COVID-19: Annual leave, bank holidays and furlough“, the ACAS Guidance suggests that employers can require employees to take holiday, provided that they give the appropriate period of notice, of twice the length of the period of leave that the employee is being asked to take. So, if the employer wants an employee to take 1 week’s leave, then they should give the employee 2 weeks’ notice.

It is unfortunate that this question hasn’t been answered. However, the government has said that they will keep the guidance on holiday under review, and so hopefully this question will be answered shortly – probably next Friday evening!!

Guidance on what you can claim

Finally, the government has issued guidance on how to calculate the amount which can be claimed under the scheme. The guide is snappily called “Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme”.

The guide doesn’t really tell us anything we didn’t know already, but does contain some useful examples on how to calculate what you can claim, so is definitely worth a read.

It does clarify a couple of points with regard to employees who are not, at the calculation date, receiving their usual rate of pay.

For an employee returning from sick leave, and who is then put onto furlough leave, the guide clarifies that the claim should be calculated against their normal salary, before tax, not the pay they received whilst off sick. This is beneficial for those employees who are paid SSP only whilst off sick.

Then if an employee is returning from a sabbatical, or other unpaid, leave the claim should be based upon what they would have been paid had they been on paid leave (so presumably the rate paid for holiday).

The guide confirms what was said previously, that the full amount of what employers are claiming must be paid to the employee. The guide confirms that furloughed staff must receive no less than 80% of their reference pay (up to the monthly cap of £2500). Employers cannot make any deductions from the sums paid to employees, other than the normal deductions for tax and employee’s national insurance. Employers cannot therefore deduct, for example, an administration charge, fees or other costs in connection with the employment.

The online service opens on 20 April 2020, so claims can be made from this date. Employers must submit their claim for all employees at the same time. Employers can make a claim in advance of a payroll run, provided that the payroll run is imminent, and so on 20 April 2020 can submit a claim for their usual April payroll.

If you would like to discuss any of the announcements mentioned above please contact a member of the Employment team.

This blog was co-written by Adam Wheal, trainee solicitor and Clive Dobbin, partner.

You can keep uptodate with all government updates on employment related issues by visiting our dedicated “Advice for employers and employees” section of our “Coronavirus (COVID-19) – Legal advice and guidance” page.