The Government has announced that by 12 May 7.5 million jobs in the UK have been furloughed under the Coronavirus Job Retention Scheme (the Scheme). Previous briefings on the details of the Scheme can be found here. The Scheme was due to end on 30 June 2020. However, following the Government’s announcement regarding the phased return to work the Government made it clear that the Scheme would not simply fall away. On 12 May, the Chancellor announced that the Scheme would remain open until the end of October. The Scheme will be amended as follows:
- The Scheme will run in its current form until the end of July.
- The Scheme will remain in place for all sectors until the end of October. However, from August there will be greater flexibility in the Scheme, for example by allowing employers to bring back employees part-time. Currently employees who are furloughed are prevented from carrying out any work for their employer.
- Employers will be asked to “start sharing the cost” of the Scheme meaning that they will asked to pay a percentage towards the salaries of their furloughed staff.
- The employer payments will substitute the contribution the government is currently making, meaning that employees will continue to receive at least 80% of their wages subject to the £2,500 per month cap.
- Further details on the amendments to the Scheme will be published by the end of May.
Additional guidance on holiday
In addition to announcing changes to the Scheme, the Government has also published Guidance on employees taking holiday during the coronavirus pandemic. The guidance had previously made it clear that employees could take holiday while they are on a period of furlough. The more detailed guidance provides further explanation of how holiday entitlement and pay operate during the coronavirus pandemic and where it differs from the standard holiday entitlement and pay guidance:
- An employer can require a worker to take leave or refuse a request to take leave if the correct notice is given in accordance with legislation. However, it does suggest that employers should engage with their employees and explain the reasons for wanting them to take holiday.
- The guidance does go on to say that If an employer requires a worker to take holiday while on furlough, the employer should consider whether any restrictions the worker is under, such as the need to socially distance or self-isolate, would prevent the worker from resting, relaxing and enjoying leisure time, which is the fundamental purpose of holiday.
- Where a bank holiday falls within the employee’s period of furlough, this will not break their period of furlough. If the employee would usually be entitled to the bank holiday as part of the period of annual leave then the employer and the employee can agree that it would be taken as holiday (noting that the employer should be entitled for the correct holiday pay for that date) or they can agree that it will not be taken as holiday, and the employee can be deferred until a later date.
- While on furlough, if an employee is taking holiday then they should receive holiday pay which is calculated in line with current legislation. This will mean that an employee should be entitled to 100% of his pay for that period. As the taking of holiday does not break the furlough period the employer can continue to claim the grant from HMRC but must then top up the difference for the employee.
- Generally four weeks of the employee’s holiday entitlement under the Working Time Regulations 1998 (the Regulations) must be taken in the relevant leave year. The additional 1.6 weeks under the Regulations can be carried over if a written agreement exists between the worker and the employer. However, new emergency legislation has been published which allows workers to carry over their holiday entitlement into the following two leave years where it has not been reasonably practicable to take it in the leave year to which it relates. Whether or not it is reasonably practicable includes where there has been a significant increase in demand in the business; the health of the worker; the length of time remaining in the worker’s leave year; the extent to which the worker taking leave would impact on wider society’s response to, and recovery from, the coronavirus situation; and the ability of the remainder of the workforce to provide cover for the worker going on leave.
- A worker on furlough is unlikely to need to carry forward holiday as they will be able to take it during the furlough period in most cases. However, if due to the impact of the coronavirus situation, the employer is unable to pay the correct level of holiday pay and fund the difference of the amount of the grant under the furlough scheme, this may be a consideration in determining that it is not reasonably practicable for the worker to take their leave.