Coronavirus Hub

Furlough and the Christmas holidays

HMRC has clarified its position on employees being furloughed over the Christmas period.

On 1 December, HMRC issued a number of amendments to their on-line documents relating to furlough, mainly to remove out of date information relating to the scheme prior to 1 November. However, an important change has been made to its main guidance document – Check if you can claim for your employees’ wages through the Coronavirus Job Retention Scheme. The change appears in the ‘Holiday pay’ section of the guide and addresses an issue that a number of our clients have asked us about (concerned that the new system is open to abuse) - which is companies ‘furloughing’ employees just because they are on holiday when they would not be working anyway. Although employers would have to pay full pay for days on holiday, if they furloughed an employee, they would still be able to claim the grant of up to £577 a week (£2,500 a month) from HMRC.

The previous guidance made it clear that employees should not be furloughed just because they are on holiday but the latest update goes further and specifically addresses Christmas. This makes it clear not only that the scheme is only available to those whose business is affected by coronavirus but it should not be used just because employees are on annual leave or the employer will do less work over the festive season.

This is what the updated guidance says:

‘Furloughed employees continue to accrue leave as per their employment contract. You can only place employees on furlough if coronavirus (COVID-19) is affecting your operations. You should not place employees on furlough just because:

  1. they are going to be on paid leave
  2. you usually do less business over the festive period’

Not only will HMRC be checking for a sudden influx of claims of a week over the Christmas break, but it will be publishing details of all employers using the scheme from 1 December.