Furlough: updated guidance confirms TUPE and overseas citizens' eligibility

Employees who were transferred to another organisation under TUPE after 28 February 2020 are eligible for furlough, the government has confirmed in the latest revision to its Coronavirus Job Retention Scheme guidance.

The new employer is eligible to claim for 80% of the employees' wages under the CJRS if either the TUPE or PAYE business succession rules apply to the change in ownership.

HM Revenue & Customs' update last week also provides clarity around some other areas of confusion about the scheme, including confirmation that staff are not able to work for companies linked to their employer while on furlough and that employers can switch employees from sick pay to furlough and vice versa.

It also confirms that employers can furlough employees who are being "shielded" or are on long-term sick leave, and they do not have to be placed on sick pay.

For employers with overseas citizens in their organisations, the guidance states that grants under the scheme are not considered "access to public funds" - which some residence permits forbid holders from receiving - and that employees under all types of visa are eligible for furlough.

The update also confirms that:

  • reclaimable national insurance and pension are on the furlough salary, not normal salary
  • a group of companies that consolidated their payroll schemes after 28 February 2020 can place employees on furlough
  • no part of the reclaimed grant can be used to fund benefits - the entire grant must be paid to the employee.

Diane Gilhooley, global head of employment, labour and pensions at law firm Eversheds Sutherland, noted that the guidance had provided some useful clarifications, but was disappointed that it failed to address whether annual leave can be taken during furlough without compromising the wage claim from the government.

"Urgent clarification is needed on this, so that employers can understand how to deal with leave that has already been booked and their options for managing the cost and impact of a substantial accrual of untaken leave," she said.

"Employers - especially those that have already furloughed their workers on the basis of previous guidance - will also be concerned that the details of the scheme are still emerging in a piecemeal fashion and that, over three weeks after the scheme was announced (on 20 March), the latest guidance may not yet be a full and definitive statement of the rules that HMRC will apply.

"Employers do appreciate that the scheme is very much a new concept in the UK and was developed urgently to support them in urgent circumstances. However, there will be some apprehension that the incremental nature of changes/clarifications to the scheme could be an indication of further (more stringent) changes to the application of the guidance yet to come."