COVID 19 UPDATE 6th APRIL 2020

April 6, 2020

I am afraid the updates in these difficult times keep on coming thick and fast. There has been some further clarification on the furlough scheme. However there are still a number of issues which have not yet been fully addressed such as taking holiday whilst on furlough, sick pay whilst furloughed and TUPE.

https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

For advisors dealing with TUPE transfers which have taken place in the last month or so this is unsatisfactory. Two particular problems arise:

  1. Employees who were furloughed by the transferor prior to the transfer.
  2. Employees who have transferred over who the transferee wishes to furlough.

The answer for transferees, at least in part, may be to make it clear that any furlough agreement entered into after the transfer is dependent on HMRC approving the payment however this is unsatisfactory from an employee’s perspective and also leads on to issues over whether redundancy is a better option for any employee who has recently TUPE transferred. It is also worth noting that a transferee who receives employees who are already furloughed has no control over what the transferor may have agreed with them prior to the transfer with any recourse being primarily against the transferor although it is arguable that an ETO defence might apply to any variation by the transferee.

There would also appear to be potential for an unscrupulous transferee to prevent staff from transferring by insisting all staff are made redundant ostensibly due to the present crisis where furlough was an option. Equally a transferee who was worried about the lack of clarity in the guidance might insist on the same course of action.

My present view is that it is unlikely that the government intends those already on furlough to lose that right because their employment has transferred and the same should apply to placing employees on furlough after the transfer. However this lack of clarity in the guidance is leading to significant uncertainty. This point needs to be addressed urgently before employers and employees alike decide redundancy is the safer option where there has been a recent TUPE transfer.

Peter Doughty

Tags:
Commercial, Employment, Family, General Civil, Insolvency, Property and Planning, Will Disputes