No Furlough for the fellow on furlough
The traditional meaning of furlough is a ‘leave of absence’, especially that granted to a member of the services, missionaries or prisoners. These days though, we are all familiar with the term as meaning paid leave under the Government scheme.
And we all know that under that scheme, employees can be paid for holiday taken during their Furlough period. And most of the case law suggests that any holiday taken during Furlough should be paid at full salary rather than at the discounted Furlough rate. Nothing new there.
But it begs the question... now that employees can Furlough and work part-time as well as more flexibly, can an employer put an employee on Furlough every time the employee wants to take a holiday? It would be great for the employer to be able to recover 80% of the employee’s salary whilst they were off on their summer holidays wouldn't it? A little bit unscrupulous though, and contrary to the spirit of the Furlough scheme…but not unlawful?
Well, no one knew for sure, because the new flexible Furlough scheme allows an employee to be furloughed for a week or fortnight, as opposed to three weeks, which corresponds quite nicely with the usual length of a summer break. So, perhaps that was what the scheme intended? This is what many assumed and plans were afoot…until last week.
On 1st July, the Government guidance was updated. We now know that “Employees should not be placed on furlough for a period simply because they are on holiday for that period”.
In other words, an employer is not permitted to Furlough an employee because they are about to take a holiday, nor just for the holiday period. This doesn’t mean that an employer can’t genuinely have furloughed an employee for a period including a pre-booked holiday absence. It means that the Furlough can’t be just because the employee is taking holiday.
Their might be exceptions to this rule but it must be the case that any Furlough solely for a holiday period will be treated as suspicious and an open invitation to HMRC to ‘reclaim’ a Furlough payment, investigate all other payments made, and wonder about fraud. If that happens, an employer might end up pleading with the prison governor as per the original meaning of the word…
Please note: This is a general summary and should not be taken as legal or accountancy advice. Guidance and opinion can change daily, so please seek specific advice before taking any steps.
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