On 16 April 2020 the right to claim statutory sick pay (SSP) was extended to cover those who are ‘extremely vulnerable’ and ‘shielding’ in accordance with government guidance. The following day the government issued further guidance on the interplay between furlough and annual leave.
Entitlement to SSP for those shielding
The Statutory Sick Pay (General) (Coronavirus Amendment (No. 3) Regulations 2020 came into force on 16 April 2020 extending SSP to cover those who are extremely vulnerable and at a very high risk of severe illness from coronavirus (COVID-19) because of an underlying health condition. Most people in this group will have received a letter informing them that they are extremely vulnerable and that they should follow government guidance on shielding.
Entitlement to SSP is dependent on meeting the eligibility criteria which is that the individual is an employed earner, earning an average of at least £120 per week and has been shielding for at least four days. Those who have received the maximum SSP of 28 weeks and women in receipt of statutory maternity pay are not eligible.
The government’s guidance on shielding was updated on 17 April 2020 and states that those who are extremely vulnerable are strongly advised to stay at home at all times and avoid any face-to-face contact until the end of June.
Can those who are shielding still be furloughed?
We have previously reported (LELR 668) on the inconsistencies between the government’s guidance on the Coronavirus Job Retention Scheme (CJRS) and the Treasury Direction which sets out the legal framework for the CJRS. In particular, the Direction states employees who are off sick can only be furloughed after the first period of sick leave has ended, which would suggest that those who are shielding and who are entitled to claim SSP cannot be furloughed until the end of the period of shielding which would – according to the guidance of 17 April - be the end of June. While it is clear that an employee cannot be paid SSP while furloughed, we do not read the rules as saying that an employer cannot furlough those who are shielding.
Indeed, the government’s guidance for employers on the CJRS, which was updated after the Treasury Direction on 17 April 2020, still provides that employees who are unable to work because they are shielding can be furloughed. And, supporting our view, the explanatory memorandum to the Amendment (No. 3) Regulations states that provision for SSP “is intended as a safety net in cases where the employer chooses [our emphasis] not to furlough them". If that is the case, then they should be treated in the same way as other employees who are on furlough. Again, clarification on this point is still needed.
Those who are furloughed after time off sick should have their pay their salary, before tax, not the pay they received while off sick.
Claims for those on variable pay, returning to work after time off sick should be calculated using either:
- The same month’s earnings from the previous year
- The average monthly earnings for the 2019 to 2020 tax year.
The interplay between furlough and annual leave
The government has provided some clarification on the interplay between furlough and annual leave.
Accrual of annual leave
The updated guidance for employees on CJRS issued on 17 April 2020 states that employees will continue to accrue annual leave while on furlough as provided under their employment contract. Confusingly, the guidance then goes on to state that “employees can agree with their employer to vary holiday pay entitlement as part of the furlough agreement.” Given that the purpose of the CJRS is to provide employers with payments to cover the costs of employment arising from the health, social and economic emergency resulting from coronavirus (COVID-19), we consider a variation to the 5.6 weeks statutory paid annual leave entitlement would be contrary to the exceptional purpose of the CJRS as per paragraph 2.5 of the Direction.
Taking annual leave during furlough
The guidance also confirms that employees can take annual leave while on furlough. However, in our view this does not necessarily mean that the employer can insist that they do so. In particular, the Working Time (Coronavirus) Regulations 2020 which came into force on 27 March 2020 seemed to have anticipated the difficulty workers will face in being able to take annual leave during a period of lockdown. As professors Michael Ford and Alan Bogg pointed out in ‘Furloughing and fundamental rights: the case of paid annual leave’, allowing employers to insist on a worker taking annual leave during furlough would defeat the purpose of the statutory right which specifically provides for workers to carry over some or all of the statutory four weeks annual leave (as per Regulation 13) if it was not reasonably practicable for them to take it as a result of the effects of coronavirus (COVID-19). ACAS recommends employers, employees and workers should be as flexible as they can about holiday during the coronavirus pandemic and insisting workers take annual leave during furlough could be seen as neither flexible nor reasonable.
In any event, whenever an employee or worker takes annual leave they are entitled to be paid their normal remuneration i.e. based on the pay they received when at work. Case law has held that this includes regular overtime and shift payments. HMRC guidance for employers on how to work out furlough pay at 80 per cent of an employee’s wages confirms that employers will be obliged to pay any amounts in relation to annual leave which are above the level of furlough pay.
If an employee usually works bank holidays, the guidance states that the employer can agree that this be treated as furlough pay. This means that the payment for bank holidays will be treated as wages during furlough rather than holiday pay. There is, however, nothing to prevent an employee from requesting to take the bank holiday as annual leave, in which case it would be paid at their normal rate of pay. If employees usually take bank holidays as annual leave they are entitled to be paid at their usual rate of pay if the bank holiday falls while on furlough or the employer could give the employee a day of holiday in lieu.
Rather unhelpfully the position with regard to holidays appears to be one that is developing as the guidance states: “During this unprecedented time, we are keeping the policy on holiday pay during furlough under review.” More guidance may therefore be on the horizon.
To read the CJRS employer guidance in full go to: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
To read the guidance on shielding in full go to: https://www.gov.uk/government/publications/guidance-on-shielding-and-protecting-extremely-vulnerable-persons-from-covid-19/guidance-on-shielding-and-protecting-extremely-vulnerable-persons-from-covid-19
To read the CJRS employee guidance in full, go to: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme
Articles shared by Thompsons relating to coronavirus (COVID-19) are correct at the time of publication. You should check the government's guidelines for the latest information and advice at https://www.gov.uk/coronavirus.