The law is constantly changing and the position set out in this paper may not be current. You should not rely on this or other ELA papers as a comprehensive statement of the law but should always seek advice if you require it from a qualified lawyer. ELA does not give legal advice.

Introduction

The Employment Lawyers Association’s ("ELA") Legislative and Policy Committee has set up a standing working party to respond and make recommendations on measures relevant to employment law during the current coronavirus crisis.

ELA is a non-political group of specialists in the field of employment law and includes those who represent claimants and respondents in courts and employment tribunals.  It is not ELA's role to comment on the political or policy merits or otherwise of proposed legislation or regulation, rather it is to make observations from a legal standpoint.   ELA's Legislative and Policy Committee consists of experienced solicitors and barristers who meet regularly for a number of purposes including to consider and respond to proposed legislation and regulations.

This note was prepared by Clare Fletcher, Slaughter & May and member of the ELA Covid-19 Working Party.

1. While the changes to the CJRS have undoubtedly increased its flexibility, they have also made the CJRS more complicated, time consuming and expensive for employers to administer. This raises the risk that employers may begin looking at other options, including redundancies.

2.    The amended guidance suggests that flexible furlough will require a written agreement with the employee (or a collective agreement with a trade union). This is in contrast to the position for ‘full’ furlough, where the guidance continues to state that the agreement must simply be recorded in writing, and that employees do not need to provide a written response. It is not clear if this is a deliberate policy decision, and if so what is the rationale for the different approach.

3.    There is also a discrepancy in the record keeping requirements. Employers must keep records of how many hours their employees work and the number of hours they are furloughed (i.e. not working) for at least six years, whereas the furlough agreement (or written confirmation of it) must be kept for at least five years. This adds additional complexity for employers in meeting their obligations.

4.    In the eligibility guidance, the previous section for claims from individual employers has been removed (it is not clear what impact this is intended to have).

5.    The guidance on claim periods is quite convoluted. It is not clear for example why a furlough period which starts before 1 July but spans 1 July must be for a minimum three week period, especially since this will require two separate CJRS claims (one for June and one for July). There is also further complexity in the new requirement for claim period to be for a minimum of seven calendar days, unless the employer is claiming for the first few days or the last few days in a month.. This means that there are effectively three minimum claim periods for employers to grapple with in the coming weeks; 30 days, seven days, and a number of fewer days, depending on the circumstances.

6.    The guidance on claim periods requires that employers can only make one claim for any period, so must include all furloughed or flexibly furloughed employees in one claim, even if they were put on furlough at different times within the period or are paid at different times. This can create real practical difficulties for employers, for example where they inherit employees on a TUPE transfer but cannot then furlough those employees until the current claim period for their existing employees has ended.

7.    The guidance on claim periods also states that when claiming for employees who are flexibly furloughed, employers should not claim until they are sure of the exact number of hours the employee will have worked during the claim period. This may make it logistically more difficult for employers to submit claims and receive funds in advance of payroll dates.

8.    The guidance on who can be furloughed states that for TUPE transfers after 10 June, the maximum number of employees that the new employer can claim for will be the total of both: (i) the maximum number of employees the new employer claimed for in any one claim ending on or before 30 June, and (ii) the number of employees that are being transferred to the new employer which have had a claim submitted for them in relation to a furlough period of at least 3 consecutive weeks taking place any time between 1 March and 30 June. This is subject to the maximum cap the previous employer was subject to. It is not clear what is intended by this final sentence; our assumption is that it means that the transferee cannot count more employees under this head than the maximum number of employees that the transferor furloughed pre-1 July. It would be useful if this point could be clarified, and potentially expanded to make it clear that transferees will need to ensure that they ascertain as part of the due diligence process both (i) which employees have been furloughed for the three-week period between 1 March and 30 June; and (ii) what cap the transferor is subject to. We also note that transferees and transferors may legitimately have different needs/issues which might make sticking to a combined total difficult.

9.    It seems likely (but is not clear from the updated guidance) that employees currently working on reduced hours can be furloughed flexibly from 1 July (this was raised as an issue in our last CJRS paper).

10.  The same is likely true of rotating employees on and off furlough – this is probably permitted post-1 July, but the guidance is not clear (and this was also raised as an issue in our last CJRS paper). Rotating employees on and off full furlough may prove easier for some employers than grappling with the calculations for flexible furlough.

11.  As yet, no new Treasury Direction has been published. The current Direction only covers the period until 30 June, so there will need to be a new one published soon. This raises the potential for further changes / clarifications in addition to those noted above.

12.  There is increasing speculation about what other grants may be made available for businesses who cannot reopen safely, and may choose to no longer use the CJRS once employer contributions are required from August onwards. There has also been some suggestion [from the CBI] that the Apprenticeship Levy could be used more flexibly to subsidise wage costs, if the government are willing to amend its terms. If such additional proposals are being considered, it would be useful if details could be provided as soon as possible, so that businesses can more effectively plan for the second half of the year.

Members of ELA Covid-19 Working Party
Co-chairs: Paul McFarlane, Capsticks; Kiran Daurka, Leigh Day

Shubha Banerjee, Leigh Day
Emma Burrows, Trowers & Hamlins
Sarah Chilton, CM Murray
Shantha David, Unison
Peter Edwards, Devereux Chambers
Clare Fletcher, Slaughter & May
Beth Hale, CM Murray
Howard Hymanson, Harbottle & Lewis
Nadia Motraghi, Old Square Chambers
Louise Skinner, Louise Skinner, Morgan Lewis & Bockius UK
Catrina Smith, Norton Rose Fulbright
Caroline Stroud, Freshfields Bruckhaus Deringer
David Widdowson, Abbiss Cadres