Mismatches between guidance and direction and continual reissues of guidance documents are contributing to a sense of chaos around the furloughing scheme, writes Jane Hallas. Here’s what we know we know and what we know we don’t
Back when I was a lecturer, I would tell my students that there was rarely a “yes” or “no” answer to a legal question but lots of shades of grey – that was what made practising law interesting.
I am beginning to regret those words.
Trying to keep track of the government’s Coronavirus Job Retention Furlough Scheme (CJRS) is challenging. On 14 April, version four of its guidance was published, swiftly followed by a Treasury Direction, which gives the scheme its legislative footing. Unfortunately, it soon became apparent that there were several major inconsistencies between the guidance and the Direction. Moreover, parts of the Direction were opaque and contradicted some of its own provisions. On Friday, 17 April, version five appeared. Then – just to prove government doesn’t rest at weekends – version six was published early on Monday.
This sense of discombobulation was further compounded by yet more amendments to Statutory Sick Pay (SSP) Regulations. In the same week, HMRC published guidance on how to calculate furlough pay and a step-by-step guide on how to claim.
To quote Donald Rumsfeld, there are a still a number of known unknowns. Here are just a few.
To begin with, who can be furloughed is a fairly fundamental question, so you would think that the guidance and Direction would be clear in this regard. However, whilst the guidance states that furlough can only be utilised if the employer is suffering from severely affected operations or an inability to maintain its workforce, the Direction allows for any employee to be furloughed as long as the reason for doing so relates to circumstances caused by COVID-19. This gives employers a wide discretion to furlough any employee they see fit. The question is: how far does this extend and who does it apply to?
Can this really have been the intention of Parliament?
Then there are shielding employees – those who have been advised to remain at home for three months due to vulnerable health. For publicly-funded schools, these staff continue to be paid as normal, as per DfE advice. However, for schools eligible to claim under the CJRS, should these employees be paid furlough or sick pay?
Originally, it appeared that if they were unable to work from home, they were not entitled to sick pay, and could only receive furlough pay if they would otherwise be made redundant. This was substantially softened in later guidance, which removed the redundancy condition. However, this has all been thrown into confusion by the amended SSP Regulations published on 16 April, which allow shielding employees to claim SSP. While this closed a gap in the previous amendment to SSP (which allowed those self-isolating to claim SSP but not those shielding), it has created more confusion as to the interplay between SSP and furlough.
It appears that lines of communication between whoever updated the SSP Regulations and the Treasury Direction aren’t strong, as the Direction does not allow a period of furlough leave to start until SSP has ended. Furthermore, it appears that eligibility for SSP is the determining factor as opposed to actually paying SSP. The position therefore appears to be that the SSP period must end before someone can be furloughed. Normally, SSP ends either after 28 weeks or when an employee is fit to return to work. But how can a shielding employee be deemed fit to return when they have been advised to shield for at least 12 weeks?
As the Treasury Direction talks about the entitlement to SSP being the determining factor, and as the Direction and SSP Regulations take precedence over the guidance, it appears that you may not be able to furlough shielding employees. Can this really have been the intention of Parliament?
And there is still uncertainty about whether employers can pay holiday pay whilst furloughing employees.
The short answer is that neither the guidance nor the Direction deal with this question, but the government’s guide on how to calculate pay and the employees’ CJRS website guidance (not the employers’ guidance) confirm that employees on furlough can take annual leave. However, employers are required to top up pay to normal 100 per cent levels for any day’s holiday taken during the furlough period.
Other grey areas include whether sick employees are eligible to be furloughed, what can be included when calculating furlough pay, and whether employers must pay staff upfront before claiming the money back from HMRC.
We wait in hope for more black-and-white answers.