Under the original rules of furlough and the Coronavirus Job Retention Scheme (CJRS), it is clear that, prior to 1st July 2020, in order to be eligible to be claimed for under the CJRS, an employee cannot undertake work for or on behalf of the employer’s organisation, or any organisation linked or associated with the employer’s organisation whilst on furlough. This includes providing services or generating revenue for any such organisation.
But what does that mean in practice? Below, we answer some FAQs on what employees are and are not permitted to do whilst furloughed.
What employees can and can’t do whilst furloughed
Can employees undertake training whilst furloughed?
Yes, a furloughed employee can undertake study and training, for example to maintain their skill set or upskill themselves whilst furloughed, as long as the purpose of this is to improve the employee’s effectiveness in their employer’s business or the performance of their employer’s business. Any study or training undertaken must not provide services to, contribute to the business activities of or generate revenue for or on behalf of the employer who has placed them on furlough (or any linked or associated organisation of the employer).
If an employee is required to undertake any training whilst furloughed, for example to complete an online course, they must be paid the relevant national minimum wage in respect of any time spent training even if this is more than 80% of their wage, as this qualifies as working time for the purposes of the legislation. This may mean that employers are not able to reclaim the total amount paid to employees in respect of periods spent training.
Can employees carry out volunteer work whilst furloughed?
Yes, a furloughed employee is entitled to take part in volunteer work whilst furloughed, including volunteer work that has been organised by the employer that has furloughed them, as long as this does not provide services to or generate revenue for or on behalf of the employer who has placed them on furlough (or any linked or associated organisation of the employer).
Employers are also permitted to help find their furloughed employees volunteering opportunities whilst on furlough.
Can an employer make contact with furloughed employees generally?
Most employers will want to keep in touch with their employees during furlough from a relations point of view. The Government guidance is silent on this issue. However, our view is that employers can and indeed should maintain contact with employees during furlough to keep them in the loop and provide them with any important updates on how the business is operating and reassure them that they have not been forgotten about just because they are not working and/or visible. ACAS guidance recommends that any furlough agreement sets out how to keep in contact during furlough, which supports the view that general contact should be maintained.
Employees may therefore be able to be involved in social and charitable events, be informed and consulted with about changes happening within the business and take part in HR matters, such as giving evidence in disciplinary proceedings.
Further, the Government guidance was updated last Friday 1st May 2020 to confirm that whilst on furlough, an employee is still permitted to undertake union or non-union representative duties and activities for the purposes of individual or collective representation of employees or other workers, as long as they do not provide services to or generate revenue for or on behalf of the furloughed employer or any linked or associated organisation.
Notwithstanding the above, it is key that employers bear in mind that employees must not do any work that makes money for the organisation or provides services to the organisation or any linked or associated organisation, as this is prohibited under the CJRS.
Can an employer require employees to attend business meetings whilst furloughed?
No, on the basis that this would arguably amount to providing services to the furloughing employer.
Can an employer require employees to check their emails?
No, on the basis that this would arguably amount to providing services to the furloughing employer. There is also a risk that employees would respond to emails received or action points contained in emails, which would be in breach of the CJRS, even if an employee only replied to one or two emails.
We would suggest that employers consider revoking furloughed employees’ access to their work emails and either set up automatic forwarding of emails sent to those who are furloughed or permit a line manager to have access to the email inbox for the period of furlough.
Can employers require employees to undertake a handover of their duties whilst furloughed?
We would recommend that employers speak to employees they wish to furlough at the point of furloughing them regarding the employee’s current workload and tasks that need to be completed in order to effect a full handover. There is a risk that providing handover information whilst an employee is furloughed will amount to providing services to the organisation or even generating revenue for the organisation, which would be in breach of the CJRS.
Can a furloughed employee participate in promotional activity?
No, on the basis that marketing activity is ordinarily carried out with the purpose of generating revenue for the furloughing employer.
What if an employer urgently needs employees to carry out work but they are currently furloughed?
If an employer needs certain work carrying out that a furloughed employee would usually undertake, and there is no one else working within the organisation that can assist or pick up the work in the absence of that person, they have the option of taking that employee off of furlough after a minimum period of three consecutive weeks. The employee in question could then carry out the work required and be re-furloughed. The Government guidance does not provide for any minimum periods that an employee must be back at work for before being eligible to be re-furloughed, and so arguably an employee can be taken off of furlough for a day or two days, and then re-furloughed.
If employers wish to rotate furlough between employees and operate a ‘roll off roll on’ system, they will need to ensure that written records are in place documenting periods during which an employee is on furlough and not on furlough and keep these for five years in accordance with the CJRS.
What are the consequences of allowing or requiring employees to work whilst furloughed?
If an employer asks its employees to carry out work whilst on furlough, the employer will be jeopardising their right to claim back the wages in respect of those employees that are carrying out work for the period during which they are carrying out work under the CJRS.
In addition, if employees carry out work for their employer that is not permitted under the CJRS, this is likely to be viewed as ‘breaking’ the period of furlough. If employees have been furloughed for less than three weeks at that point, this will mean that the requirement for employees to be furloughed for a minimum consecutive three week period will not have been satisfied and the employer will be unable to claim for wages in respect of any of that period of furlough.
HMRC have the right to retrospectively audit all aspects of any claim under the CJRS and there is a real risk that if it comes to light that an employer has claimed wages in respect of a ‘furloughed’ employee who was still carrying out work whilst furloughed, the employer will be held to be in breach of the CJRS and liable to repay any monies paid either during that period or any monies paid under the CJRS at all. It is not yet known how strict an approach HMRC will take, but it is clear that this is an unprecedented scheme that has been set up with the best intentions to assist employers during these difficult and uncertain times and that no abuse of this will be tolerated.
A breach of the CJRS will only affect employees (in monetary terms) if the furlough agreement between the employer and the employee contains terms providing that the employee has to repay monies received during any period of furlough in the event that HMRC withhold monies or require repayment. If the furlough agreement does not contain such a term, then technically the employee will not have to reimburse the employer for monies paid whilst on furlough in order for the employer to then reimburse HMRC.
Who will find out if employers are asking their employees to do work?
The Treasury Direction makes it very clear that a CJRS claim cannot be made in respect of an employee if it is abusive or contrary to the purpose of the CJRS. It is arguable that claiming wages in respect of an employee who is still carrying out work that is not permitted under the CJRS would amount to an abuse.
As above, HMRC have the right to audit claims and the Government guidance states that payments may be withheld or need to be repaid in full to HMRC if any claim is found to be fraudulent or based on dishonest or inaccurate information.
HMRC have put in place an online portal for the public and employees to report suspected fraud in the CJRS and this is encouraged.
Accordingly, if an employer requires employees to carry on working whilst furloughed and claiming their wages back under the CJRS, the employee or anyone with knowledge of this, for example the employee’s friends and family, can report that.
According to figures provided to the BBC by HMRC, there have been over 3,000 reports of fraudulent claims since April. HMRC are now due to tackle businesses concerning these claims.
Can an employee be disciplined for refusing to work whilst furloughed?
No, and it would be unreasonable for an employer to proceed to subject an employee to disciplinary proceedings whilst furloughed for this reason. The employer has to have offered furlough to an employee for them to be able to be furloughed, and that offer is made in the knowledge of the rules of the scheme which, amongst other things, prohibit an employee from carrying out work for the furloughing employer whilst furloughed.
A furloughed employee is not absent without leave and it is difficult to identify how an employer might frame a refusal to work whilst furloughed as misconduct when this is in accordance with the rules of the CJRS.
What if the employee is conscientious and does work without the employer requiring that?
If an employee carries out work without the employer requiring this or knowing the work was being carried out, this could still amount to providing services and/or generating revenue for or on behalf of the organisation and prejudice the employer’s ability to claim wages under the CJRS.
As above, in order for an employer to keep control and check over what an employee is or is not doing whilst furloughed, we would recommend considering revoking access to work emails for those that are furloughed and making it clear in the furlough agreement that an employee is not permitted to carry out work whilst furloughed. Employers could also consider making it a disciplinary offence to work whilst furloughed in order to discourage employees from doing this.
What about working for another employer whilst furloughed?
The Government’s guidance confirms that an employee who has been furloughed from their current job can take on a new job, provided this is permitted by their contract of employment. For example, certain contracts of employment will provide that an employee must not work for another employer during the course of their employment with the organisation during working hours or without prior written consent. If this is the case, we would recommend that parties agree a variation to the terms of the contract in writing on a temporary basis or that the employer provides that written consent, specifying that this only applies in relation to any period of furlough whilst the coronavirus pandemic is on-going.
It is worth noting that there is no obligation on an employer to permit an employee to work for another employer whilst furloughed if this is prohibited by the contract of employment, although the employee would have a valid argument that any alternative work would not be interfering with their work for the furloughed employer, as no such work is required.
What about after 1st July?
As per our update, the Chancellor has now confirmed that a more flexible form of furlough will be introduced with effect from 1st July 2020. From that date, employers will be permitted to agree more flexible working arrangements with furloughed employees. For example, employers and employees can agree a return to work on a part time basis with employees working any number of days/hours per week and shift patterns to suit the needs of the business.
Employers will be required to pay employees in full for any time spent working and will be responsible for tax and National Insurance contributions on those payments. Employers will not be able to reclaim under the CJRS for payments made in respect of time spent working, but will still be able to reclaim under the CJRS for employees’ ‘normal’ hours that are not worked. When claiming under the CJRS, employers will have to report on hours worked and the usual hours an employee would be expected to work in a claim period. The minimum claim period will be a period of one week.
In order to be eligible to reclaim under the CJRS for hours that are not worked, employers and employees will need to agree new flexible furloughing arrangements and any such agreement must be confirmed in writing.
In light of the new flexibility to the CJRS rules, from 1st July 2020 claims will no longer be able to overlap calendar months.
Further guidance regarding flexible furloughing is expected to be published on 12th June 2020.
The rules relating to the CJRS and the interpretation of those can be quite complex and the penalties for non-compliance with those rules can be damaging for employers, both financially and reputationally if any non-compliance is picked up in the media for example.
At a time where many businesses need to be very careful with their finances, we would recommend that employers take expert legal advice where they are unsure on any aspects of the CJRS.
We will provide more commentary on the guidance about flexible furlough and how employers should use this after the guidance is published.
How Nelsons can help
If you require any advice or assistance regarding the CJRS, furlough or any other coronavirus-related matters, please do not hesitate to get in touch with Ella or another member of the team in Derby, Leicester or Nottingham on 0800 024 1976 or via our online enquiry form.