• Should my employee be on furlough or SSP?  What if they are entitled to enhanced sick leave?

Whether an employee should be on furlough or SSP is likely to depend on whether their sickness absence is short-term or long term.

The current Coronavirus Job Retention Scheme (CJRS) guidance states that the CJRS is not intended to cover short-term absence. This is because employees must be furloughed for a minimum of 3 weeks in order for employers to avail of the scheme. To this end, short-term illness or a period of self-isolation for 7 or 14 days should not typically be a factor when determining whether or not to furlough an employee. For longer term absences, the CJRS guidance states that it is possible to furlough employees who are currently off sick.

However, unfortunately the CJRS guidance is somewhat at odds with the HMRC Treasury Direction. The Treasury Direction states that any instruction which puts an employee who is receiving (or entitled to) SSP on furlough, does not take effect until this SSP period is ended.

Ultimately, whether to place employees on furlough before the SSP period has expired is a matter for the employer and satisfaction of the relevant criteria. However, given that the Treasury Direction is binding on HMRC, we would advise employers to avoid furloughing any employees on sickness leave until such a time as their SSP period has come to an end.

If an employer is contemplating furloughing an employee who is already on sick leave, they should follow the government guidance on how to appropriately and legally furlough employees. As an aside, Employers should note that Employers who qualify for the new Coronavirus Statutory Sick Pay Rebate Scheme may be able to claim under both that scheme and the CJRS for the same employee, but not for the same period of time.

Employers who offer enhanced sick pay may well find it difficult to obtain an employees’ consent to be furloughed, since the furlough scheme may result in them receiving a reduction in salary (i.e. 80% of their salary capped at £2,500). Depending on the circumstances, employers may be able to agree a top up for those employees while they remain ill, but this should be handled with care and we would suggest seeking advice where necessary.                                                                                                      

• What if someone is sick whilst on ‘furlough leave’?                             

Unfortunately, there is no clear answer to this query.           

The CJRS states that furloughed employees retain their statutory rights, including their right to SSP. This therefore means that furloughed employees who become ill must be paid at least SSP.  The guidance advises that it is up to employers to decide whether to move employees who become sick during furlough onto SSP or in the alternative, whether to keep them on furlough, at their furloughed rate of pay.     

If an employee is entitled to enhanced contractual sick pay which equates to 100% of normal earnings, they may remain entitled to pay at that level if they become sick during furlough, unless the employer has specifically provided for contractual sick pay to be reduced to reflect the reduction to their pay during furlough, or alternatively, entirely suspended, as agreed with the employee in question.  Employers should be cautious in this regard as any refusal to not pay an employee their full entitlement to enhanced contractual sick pay may be considered an unlawful deduction of wages.

• What happens if an employee returns from furlough only to go off on sick absence?                                               

Whilst frustrating, there is unfortunately little that an employer can do to prevent an employee from taking sickness leave after a return from furlough.  

An employer should follow their usual absence management procedures in this regard. If an employer has concerns that an employee is being dishonest about their absence, this may be considered a disciplinary matter in accordance with the Employer’s policies.

If you need advice on how to manage short-term and long-term absence, please contact a member of our employment team.

• Can I furlough somebody returning from maternity leave?  What issues may arise?

In short – yes. An employee returning from maternity leave can be placed on furlough.

The CJRS guidance states that employees on unpaid leave should not be placed on furlough. However, crucially, this does not apply to women on maternity leave.                                                                             

An employee returning from maternity leave should not assume that they will automatically be furloughed on their return. However, to refuse furlough to an employee on the basis that they have taken maternity leave will likely be considered discrimination.                                  

An employer should discuss return to work arrangements with those off on maternity leave prior to their return. In particular, employers should remind staff returning from maternity leave that if they are subsequently taken off furlough leave, they cannot go back onto maternity leave.

•  How is furlough pay calculated if an employee has been on maternity leave in the last year?

Government guidance says that if an employee has been on maternity leave recently and she is moving onto furlough, her furlough pay should be based on her normal salary, not her SMP, Maternity Allowance, Statutory Sick Pay or unpaid maternity leave.

If an employee has a fixed annual salary and is returning to work after maternity, paternity, adoption or shared parental leave, an employer must calculate furlough pay against the employee’s normal salary, before tax, not the pay they received whilst on leave.

If an employee’s pay varies according to the number of hours worked, their furlough pay must be based on either the:

• same month’s earning from the previous year, or
• their average monthly earnings for the 2019-2020 tax year.

Employers must use whichever is highest so that an employee is not disadvantaged by taking statutory leave. Given the technicalities involved in same, it is recommended that employers seek advice on a case-by-case basis.

• What if my employee refuses to return to work?

It is understandable that employees may have concerns about returning to work.

If the employee can work from home, this may well resolve the issue. If not, the employer would need to consider the current public health advice, the specific reason that the employee is concerned about attending work and whether it would be discriminatory to refuse home working, take disciplinary action, or withhold pay in light of the employee’s refusal.

Employers should be cautious about taking disciplinary action in respect of a refusal to attend work as same may result in a claim for discrimination and/or unfair dismissal. In particular, certain dismissals related to the raising of health and safety concerns may amount to an automatically unfair dismissal which does not require qualifying service. Furthermore, action short of dismissal on these grounds may amount to a detriment which is unlawful under Article 68 of the Employment Rights (NI) Order 1996, as amended.  

Ultimately, how an employer should respond to concerns regarding returning to work will depend on the unique circumstances of the employee in question, for example: if they are placed in a ‘high risk’ category; if they are not considered ‘high risk’ but are particularly vulnerable; if they are shielding due to vulnerable family member; and whether the employee is pregnant etc.

Specific advice should therefore be sought in respect of how to deal with concerns raised by employees about a return to the workplace, especially in light of the aforementioned risk of an Industrial Tribunal claim.  

• How do I manage accrued leave?

Recent government guidance has confirmed that employers can require staff to take annual leave while they are furloughed, subject to usual statutory notice periods.

Employees should be given at least twice as many days’ notice as the amount of leave that they are being asked to take. For example, if an employer plans to close for five days and asks its workforce to use annual leave during this period, the workforce must be given 10 days’ notice.

The guidance advises businesses to “engage with their workforce and explain reasons for wanting them to take leave before requiring them to do so.” In short, employers should not see this an opportunity to deplete furloughed employees’ holiday entitlement.

The guidance goes on to say that employers should consider whether the aim of annual leave (rest and relaxation) is met if someone takes annual leave during furlough. Whilst this is an important consideration, it is unlikely that a furloughed employee will be able to prove they were unable to take annual leave for this purpose during the crisis.

• Can I ask employees to defer taking annual leave?

Yes – employers can ask employees to defer taking annual leave.

This may arise in situations where employers are not topping up the 80% furlough pay. As stated above, employees would be entitled to receive their usual holiday pay based on their normal remuneration, not the 80% under the CJRS, and employers may not want to pay the additional amount in the present climate.

It is also important to note that on 24 April 2020, the Working Time (Coronavirus) (Amendment) Regulations (Northern Ireland) 2020 came into force and amend the Working Time Regulations (Northern Ireland) 2016 to permit annual leave that could not be taken as a result of Coronavirus to be carried into the following two leave years. However, please note that carry over is limited to the 20-day entitlement (pro-rated for part time workers) under the Working Time Directive.

• Can I subsidise holiday pay with furlough funding?

Employers can claim through the job retention scheme for furloughed workers even while they were taking holiday. However, please note that an employer is required to make the difference up if the employee is entitled to higher holiday pay than their furlough pay.

• What about bank holidays?

For furloughed workers who would usually take bank holidays as annual leave, the guidance sets out two options. Employees can either take the bank holiday as annual leave, and be remunerated as agreed in their employment contract, or bank holiday can be deferred if this arrangement is agreed between the employer and worker.                                         

• Do I have to re-employ after furlough?  If not, what’s the process?

Whilst the CJRS has provided businesses with some time before making more drastic changes to the workforce in response to the pandemic, most will already be trying to evaluate the short, medium and long-term impact of Covid-19 both on the economy in general and more specifically their business. Some businesses will have to make redundancies and others may have to close their operation entirely.               

The CJRS confirms that an employee can be made redundant whilst on furlough or afterwards and that an employee’s redundancy rights will not be affected by being furloughed. Employers cannot use the CRJS to claim reimbursement of redundancy payments.           

Prior to considering redundancies, employers should consider alternative options, such as a reduction in an employee’s hours or a reduction in salary to preserve the workforce. It is important to remember that any change to an employee’s terms and conditions of employment, will require consent from the employee in question.                                                              

• What if I have to make redundancies?

If redundancies are unavoidable, employers should carry out the redundancy process in a fair and reasonable manner. As always, it is important to comply with statutory requirements when carrying out a redundancy exercise.

Larger employees who are looking to impact on 20 or more employees will also need to be mindful of obligations to collectively consult for a minimum of 30 days or 90 days if 100 or more employees will be affected. Employers are reminded that statutory requirements on collective consultation in Northern Ireland are not the same as those in Great Britain.                  

Employers should also be aware that whilst employees are on furlough their employment rights are otherwise continuing. For example, employees who did not have one years’ service at the point when they were furloughed could achieve this whilst on furlough; at which point the steps required to make a redundancy become more onerous.                 

Finally, employees with longer standing service will potentially be entitled to long periods of notice which will also need to be factored into any calculations.

It is important that employers take advice when seeking to commence a redundancy process given the complexities involved in same.                           

• How should furlough impact on redundancy pooling (if at all)?

Employers should avoid taking ‘furlough’ into consideration when identifying selection pools. The choice of those individuals placed within a redundancy pool must be within the range of reasonable responses to defend an unfair dismissal or discrimination claim. Employers must usually consider the type of work which is ceasing or diminishing, and which employees perform this kind of work. It is important to remember that it is the post, not the person that is being made redundant.

If an employer limits the selection pool to those already furloughed this may be regarded as unfair because the selection process for putting employees on furlough may not have been as vigorous as required when dismissals are considered.

Employers should not therefore be tempted to short-cut this process; particularly where for example child-care duties have impacted on a decision to furlough or not. Employers should also not lose sight of their obligations to employees who are currently on any other statutory leave, i.e. maternity leave, sick leave as this could also give rise to discrimination claims.

The information contained in this advice paper is accurate as of 21 May 2020 and provides general guidance on the queries raised. It is not a substitute for seeking specialist legal advice on the matters set out above. Should employers require legal advice in respect of the Coronavirus Job Retention Scheme, please contact our Employment Department on [email protected] or 028 9043 4015.