May 04, 2020

U.K. Employment Law Update: Furlough Leave Updates and Recommended Changes to Employment Tribunal Processes

Recent Updates on the U.K.’s Furlough Leave

The U.K. government has published various updates to its guidance on the Coronavirus Job Retention Scheme (colloquially known as the furlough leave scheme). Below we summarise the most significant developments:

  • The government has extended the scheme to the end of June 2020, so employers can continue to furlough employees and claim 80% reimbursement for their wages (subject to the monthly cap of £2,500 per employee) from the U.K.’s tax authority, Her Majesty’s Revenue & Customs (HMRC), up to 30 June 2020.
  • The scheme has also been extended so that employees who were employed on or before 19 March 2020 (as opposed to 28 February 2020 previously) are eligible to be placed on furlough leave, provided that the employer had submitted ‘Real Time Information’ payroll data to HMRC by 19 March 2020 in respect of those employees.

Annual Leave

  • Furloughed employees will continue to accrue annual leave during furlough leave.
  • Furloughed employees will also be able to take annual leave during furlough leave.
  • Employers can claim for reimbursement of 80% of employees’ wages (subject to the monthly cap of £2,500 per employee) whilst the employees are on annual leave.
  • Employees will, however, be entitled to receive their usual rate of pay for any period of annual leave, so employers will be obliged to top up employees’ wages to 100%. With two bank holidays in May in the U.K., this is something that employers with furloughed employees who are contractually entitled to bank holidays as annual leave should be mindful of.

Sick Leave

  • If an employee becomes sick whilst on furlough leave, the employer can choose whether to keep them on furlough leave or move them to sick pay (either statutory sick pay or contractual sick pay, if relevant).
  • If the employer moves an employee to sick pay, it will not be able to claim for reimbursement of that employee’s wages through the furlough leave scheme.
  • The U.K. government’s guidance also states that an employer can furlough an employee who is on sick leave, but this appears to contradict the U.K. Treasury Direction which states that an employee on sick leave cannot be furloughed before the end of their sickness period. We will therefore have to await further guidance on this issue.

HMRC’s Online Portal

  • The online portal for submitting claims went live on 20 April 2020, and whilst there were initial reports of the portal crashing, overall users have reported that it is working well.
  • HMRC are aiming to process claims and make payments to employers within six working days.
  • Employers can only make one claim per month, but can submit claims for multiple months as one claim.

Law Commission Recommends Changes to Employment Tribunal Processes

The Law Commission’s consultation into the jurisdiction and powers of employment tribunals ran between September 2018 and January 2019. The consultation looked at various aspects of employment tribunal processes, particularly the interaction of the shared jurisdiction of employment tribunals and civil courts in certain employment and discrimination matters. The Law Commission has now published its Employment Law Hearing Structures report which sets out its findings and makes various recommendations for changes to employment tribunal processes. The most significant of these are as follows:

  • An increase to the time limit for most employment claims from three to six months.
  • Giving employment tribunals the power to extend the time limit for bringing claims where it is ‘just and equitable’ to do so. Currently, tribunals can only extend time limits where it was ‘not reasonably practicable’ for the claimant to comply with the time limit.
  • Extending employment tribunals’ jurisdiction to include breach of contract claims that arise during employment. Currently, tribunals can only hear breach of contract claims from employees whose employment has terminated.
  • An increase in the amount of damages that the employment tribunals can award for breach of contract claims from £25,000 to £100,000. This would assist claimants who may otherwise have to bring breach of contract claims in the civil courts, while concurrently bringing connected statutory employment claims in the employment tribunal.
  • Setting up a specialist “Employment and Equalities List” in the High Court for employment disputes, including restrictive covenants, breach of confidence, garden leave and team move cases.

Whilst the above are only recommendations, the U.K. government must review the Commission’s recommendations and provide a full response within a year. In the past, more than two-thirds of the Commission’s law reform recommendations have been implemented by the U.K. government. We will keep you updated on any developments.

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