COVID-19 Employment law changes

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COVID-19 Employment law changes

Published 6 April 2020

Updated HMRC guidance on Coronavirus Job Retention Scheme

Following on from our alert on 27 March here, HMRC have now released some updated  employer guidance (Employer Guidance)  on the Coronavirus Job Retention Scheme (CJRS).  Updated employee guidance has also been published (Employee Guidance). The new guidance clarifies some of the issues employers have been grappling with over the last week and also sets out some new provisions. However, there remains a number of unanswered questions.

What we now know:
  • Rehiring employees and placing them on furlough

The updated guidance makes clear that employees who have been dismissed for any reason since 28 February 2020 can be rehired and placed on furlough. The original guidance stated that employees who had been made redundant since this date could be rehired and furloughed but was less clear on employees who had been dismissed for other reasons. So essentially, if employees stopped working for their employer after 28 February to go to a new role, which subsequently fell through for COVID-19 reasons, they could be re-hired by their previous employer and then furloughed. The would, of course, be at the discretion of the employer.

  • Working for another employer whilst on furlough

The updated guidance also clarifies that employees with two jobs can still work for one employer while on furlough from the other.  An employee who is placed on furlough is also able to start a new job with a different employer. However, this would have to be permitted by the employee’s employment contract with the original employer.

  • Multiple periods of furlough

The previous guidance stated that employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. This guidance clarifies that employees can be furloughed multiple times, i.e. they can be furloughed, brought back to work, then re-furloughed. However, each separate instance must be for a minimum period of 3 weeks.

  • Commission and overtime

The 26 March 2020 guidance made it clear that fees, bonuses and commission would not be included in the furlough payment. However, HMRC has slightly modified that position in the amended guidance and confirmed that employers can claim for “any regular payments you are obliged to pay employees”. This includes wages, past overtime, fees and “compulsory” commission payments (we have interpreted this to mean contractual commission payments). However, discretionary bonuses (including tips) and commission payments and non-cash payments should be excluded.

  • Salary Sacrifice

The new guidance confirms that, for the purposes of assessing pay to be furloughed, any reduction in an employee’s salary (i.e. any salary sacrificed by the employee) should not be re-instated/taken into account.

This means that furloughed salary will be assessed on the lower post-sacrifice rather than pre-sacrifice salary. This applies in respect of all salary sacrifice arrangements whether in respect of pensions benefits or other benefits.

Also employees (both furloughed and non furloughed) will be permitted to immediately come out of or vary salary sacrifice arrangements, provided that any necessary contractual amendments are made.

  • Benefits

The guidance also confirms that the furloughed salary should not include the cost of any non-monetary benefits provided to employees, including taxable benefits in kind, such as the value of health insurance or a car.

Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of CJRS.

  • Employees with caring responsibilities

One issue which has only been referred to in the most recent guidance is in relation to the position of those with caring responsibilities e.g. individuals with childcare responsibilities. The guidance states that employees who are unable to work because they have caring responsibilities resulting from the current COVID-19 situation can be furloughed.

  • Further details on categories of workers

- Although implicit in the previous guidance, it is now clear that the CJRS can cover “workers” as opposed to just employees, as long as they are paid through PAYE.

- Apprentices can also be furloughed, but they must receive at least National Minimum Wage for all time spent training. 

- Further guidance has been given regarding other categories of workers e.g. employees on fixed-term contracts; office holders (including company directors); salaried members of Limited Liability Partnerships (LLPs); agency workers (including those employed by umbrella companies); all of whom are eligible for furlough, albeit the CJRS sets out the full requirements. 

What remains unclear:

Frustratingly, there a few points, including those set out below, where the guidance does not assist. Our team can advise you as to the best approach to take on both of these matters.

Annual Leave

The updated guidance is silent on how the CJRS interacts with annual leave. It does not address whether employees can take or be required to take annual leave during furlough and, if so, what remuneration they are entitled to for that leave period. Updated Acas guidance published on 2 April 2020 ACAS guidance suggests that furloughed employees can still request and take holiday in the usual way but does not state whether they should be paid their normal remuneration or the furlough rate. 

Sickness absence

The updated HMRC guidance also leaves some questions unanswered regarding the interaction of the CJRS with sick leave and statutory sick pay (SSP). The guidance is clear that employees who are already receiving SSP cannot be furloughed until they return to work. However, it does not address the situation of an employee who becomes sick whilst they are furloughed.


The updated guidance is silent on whether or not employees who TUPE transfer after 28th February can be furloughed by the new employer. We are aware of anecdotal evidence that HMRC have confirmed in individual cases that TUPE transferred staff can be furloughed but HMRC have not published any official confirmation of this.

Carry-over of statutory annual leave

As has been widely reported in the press, the Government have introduced legislation relaxing the usual rules that annual leave entitlement must be taken in the holiday year to which it relates.

The new rules state that where it is not “reasonably practicable” for a worker to take some or all of their four week statutory annual leave entitlement under the Working Time Regulations, as a result of the effects of COVID-19, the worker is entitled to carry forward any untaken leave into the next two leave years. The new rules do not only apply to keyworkers or key worker industries. They also bring in a restriction on an employer’s right to refuse to allow  workers to take carried over leave - they may only refuse where the employer has “good reason” to do so. Good reason is not defined, however it is likely to include operational reasons. This legislation has been brought in as an emergency measure in response to the virus but the Regulations do not make clear when they will expire/be revoked.

What this means for employers?

While these new Regulations do not only apply to key workers they are more likely to be relevant in key worker industries and those industries who have seen an increase in their workload as a result of the crisis. The Regulations do not say that leave can be carried over where a worker or employee was unable to go on their holiday of choice but rather because it was not practicable for them to take the leave. This must arguably be because of work pressures.


Emergency volunteering leave

This is a new form of leave for those individuals who wish to volunteer to help out during the coronavirus crisis. The volunteer jobs involve:

  • delivering shopping to vulnerable people;
  • transporting patients to and from hospital;
  • driving medicines and equipment to NHS and care facilities; and
  • checking up on isolated individuals by telephone.

Employees on furlough leave are able to volunteer, as are employees and workers who are in active work. However, those working for small employers with fewer than ten employees, civil servants, those working in the legislature, and police officers cannot take the leave.

In order to take the leave a worker must notify their employer in writing of their intention to be absent on leave for the period specified in an emergency volunteering certificate, and provide a copy of this certificate to their employer. They must do this at least three working days in advance of the leave they wish to take. This certificate will be issued by authorities, including: the Department of Health, the NHS, or County, District, or London Borough Councils.

The leave specified on the certificate will be a block of two, three or four weeks within a consecutive 16 week period. During a period of leave, an employee is not entitled to their normal salary and wages, but they are entitled to benefit from all the terms and conditions of employment which would have applied if the employee had not been absent. They are also entitled to return from leave to the job in which they were employed before their absence.

Workers who take, or propose to take, the leave are also protected from suffering a detriment, including dismissal. Employees are protected from being automatically unfairly dismissed for these purposes meaning they do not need two years’ service to bring an unfair dismissal claim and compensation is uncapped.

What this means for employers

The national response to this scheme has been huge. The three days’ notice required to take the leave is very short, however, this is unsurprising given the volunteers are needed to deal with a current crisis. Managers will need to be made aware of the need not to subject a worker to a detriment or dismiss an employee for taking the leave. Where a genuine redundancy situation occurs after an employee has taken the leave this will need to be carefully documented to avoid falling foul of the automatic unfair dismissal rights afforded to those who have taken emergency volunteering leave.

Coronavirus Act 2020 Schedule 7


Zoë Wigan

Zoë Wigan

London - Walbrook

+44 (0)20 7894 6564

Ceri Fuller

Ceri Fuller

London - Walbrook

+44 (0)20 7894 6583

Hilary Larter

Hilary Larter


+44 (0)113 251 4710

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