Guidance on the furlough process - Job Retention Scheme

Now that the Government has published broad guidance on the Coronavirus Job Retention Scheme (JRS), the legal profession is beginning to clarify what that actually means in practice for employers. We are therefore now able to provide some clarification on the process of using the JRS. This article only applies to the process and it focuses on what to do if you do not have a contractual lay-off clause in your employment documentation. If you have a contractual lay-off clause then give us a call as the process will be slightly different. We will provide information on the financial element of the Job Retention Scheme in a separate article.

1. Who can you transfer to the Job Retention Scheme?

Any employee or worker that you employed on 28 February 2020 and paid through your PAYE scheme. This includes employees on zero and flexible hours contracts as long as they are paid through PAYE.

People who were on unpaid leave at 28 February cannot be furloughed. The same applies to those who are off sick and on maternity leave. They will remain on sick leave or maternity leave until they would normally return to work. At that point they can be furloughed.

Employees who are shielding in line with Public Health guidance because they are in a vulnerable group can also transfer to the Job Retention Scheme.

2. How do you go about the transfer?

The legal position here is very clear. Unless you are closing your business in its entirety, you must use a "fair" selection process. A fair selection process is critical to avoid any claims for discrimination. This means using clear and objective criteria for who you are selecting and clearly recording your decisions. We would recommend that you use the same selection process for JRS as you would for a redundancy programme, focusing on skills and experience to choose who remains and who moves to the JRS. Make sure your selection process is transparent and is robust enough to be used in your defence if needed.

Once your selection process is complete, you can then begin individual consultation with employees and gain their agreement to transfer to the JRS. As this is a special leave of absence, it is a change to the contract of employment (not only because you are no longer providing work) and therefore agreement must be reached.

Equality legislation will apply to both the selection criteria and the process, as will unfair dismissal protection. Therefore both your selection criteria and your consultation process need to be clear and objective.

If you are transferring 20 or more employees to JRS, the guidance says that a collective consultation process will be triggered, which means a 30 day period of consultation. Having taken advice on this matter, it appears that this only applies if you are intending to terminate employment. As the JRS is designed to avoid the need for redundancies, it appears that collective consultation will only apply at the point at which are considering redundancies, which may be after a period of furlough. If you think that you might be in this situation at some stage, please talk to us before you begin any process.

In short, normal redundancy process laws apply so don't do anything rash or rushed. Proper preparation is key, as with all robust employment decisions.

3. How long can people be furloughed?

The Goverment guidance mentions a minimum 3 week period. This is designed to stop employers using JRS where it really does not apply. The wording actually says "you can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for". This suggests therefore that there can be a short return to work, or a period of holiday, before the employee is furloughed for a second period.

4. Can employees work during periods of furlough?

The short answer is no. If you need certain employees to continue to undertake work for you the JRS scheme will not apply to them. The best way to deal with this is to put a skeleton staff in place who have the key skills needed to keep your business running and transfer everyone else to the JRS (using of course a proper selection process).

We have been asked a lot about other jobs, as zero hours or part-time people often have two or more jobs. If they have two or more jobs then they can be furloughed in one and not the other, and continue working in the job that is still required. People can also carry out other work if furloughed, unless you are paying 100% of their salary during the period of furlough. If you are paying 100% then you can insist that they do not work for anyone else while they are furloughed. If you are not paying 100% then they can work for someone else entirely during their period on the JRS.

We have also been asked about volunteer work while on the JRS. The guidance is also clear about this. The employee cannot volunteer for you or your organisation. They cannot provide services to your organisation or generate revenue for your organisation, but they can volunteer elsewhere, as part of the NHS volunteer group for example.

5. What about holiday?

There are conflicting messages going around about the accrual or taking of holiday and the Government guidance so far is silent on this.

It is our view, and that of the legal profession, that holiday will continue to accrue during the period of furlough. It accrues while on sick leave and maternity leave etc. so as the contract of employment still exists during furlough, it is highly likely that the same rules on holiday accrual will apply.

There is not yet any guidance on the taking of holiday while on furlough, but the legal view is that people cannot take holiday during a period of furlough. To take holiday staff have to be removed from the JRS. Holiday would have to be paid at full salary, not 80%.

There was a statement last week about unused holiday being carried forward for up to 2 years. Currently the statutory portion of holiday (28 days) has to be taken within the holiday year and cannot be carried forward. The Working Time Regulations will have to be amended to allow this change, so we will await further news. As with all the Government statements so far, the specifics are nowhere near as easy or as generous as the soundbite!

This is update number 2 to this page, so we will continue to update as and when more detail emerges.

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