On the 15 April 2020, HMRC issued further and substantial guidance to employers on what needs to be contained in a Furlough Agreement and what needs to happen to it. The Treasury also published the full rules of the Furlough Scheme by way of a Direction to HMRC. Links to both are below.
One of the biggest issues relates to Furlough Agreements. The Direction states that an employee is furloughed if they have been instructed by their employer to cease all work in relation to their employment, for 21 calendar days or more, and that the employee has agreed in writing.
Previous guidance suggested that an employee need only be notified. This now raises the question of whether an employer can claim if an employee has not actually agreed, for example if they were emailed the agreement but did not respond with their agreement.
Another problem area could be where the agreement only relates to reducing salary, not actually being instructed to and agreeing to cease work.
Finally, if an existing agreement does not tick all the boxes in the latest guidance, can a new one be issued retrospectively or will an employer only be able to claim from the date a revised version is signed? These are grey areas and commentary suggests that a judicial review may be required further down the line.
On a positive note, the Direction (which has the status of law, not the guidance) does not have a requirement for the agreement in writing to predate the period of furlough. This being the case, it is therefore open to employers to seek now and continue to seek, the written agreement of their furloughed employees, in terms which are compliant. An updated agreement can explain that it is being done in light of the new guidance and directive and thus hopefully satisfy any audit enquiries from HMRC (possibly over the next five years, being the time agreements have to be kept for).
At this stage, employers should make sure that their agreements are as compliant as possible and if not already done so, get their employees urgent agreement (by email is fine).
If you need assistance in this area, please do get in touch.
15 April 2020 Guidance:
15 April 2020 Direction: