In Admin/CVL does Furlough continue from oldco to newco?
- The point is that putting an employee on furlough does not alter his or her employment status. It is merely a temporary variation to the contract (subject to the employee agreeing). The point is also that it keeps the employee's job open for the employee so that the employee can return to that job when the furlough period ends. Indeed, the employee is still in the job and still has the same duties but is just not working.
- I note that the Guidance issued by the government specifically states that where a company is being taken under the management of an administrator, the administrator will be able to access the scheme.
- The Guidance also states that, when the government ends the scheme, the employer must make a decision, depending on its circumstances, as to whether the employee can return to his or her duties. If not, it may be necessary to consider termination of employment (redundancy).
- The Guidance also makes clear that employees that have been furloughed have the same rights as they did previously, including rights against unfair dismissal and to redundancy payments.
- It follows that the furlough is capable of continuing from one company to the other, so by definition, newco acquires business, and government continues to pay furlough for employees until they can return to work.
- In short, the job retention scheme and the fact of an employee having been placed in furlough does not cause the position to be any different than it would otherwise have been.
Can you clarify whether the above is related to TUPE situations only?
My interpretation for a liquidation would be that an employer could Furlough now and liquidate in a week or two, wherein the RPS standard role would kick in and then, if a newco acquires the business and assets, they (newco) could Furlough going forward?
- This e-mail relates to the query above which arose out of an original query dealing with where a newco acquired a business as a whole, and whether any employees who had been put into furlough by oldco could continue to be in furlough and paid for under the Government's scheme.
- The answer was that they could continue to be paid for on the basis of being in furlough. (3) The further query is asking whether this is related to TUPE situations only.
- The answer is that it is related to TUPE situations only.
- The original query presupposed that the employment of the furloughed employee had continued from oldco to newco.
- In any situation where the employment of an employee has been brought to an end, for example by the liquidation in company, the employee would not continue in furlough and any period of furlough ends with the employment.
- In such a situation, if a newco acquires the business and assets of the company and then takes on the employees (effectively as new employees), the newco could not furlough employees going forward because the new employees would not have been on the payroll of newco as at 28th February.
- Employees hired after 28th February cannot be furloughed.
- Thus, any employment on 28th February would have had to be part of the same continuing employment, without there having been a break in employment, which would be the case if there had been a TUPE transfer between oldco and newco.
More Information
- Does accepting a new job offer before the date of redundancy prevent a director making a claim for redundancy to the RPS?
- In a TUPE transfer situation, will the new company need to re-apply for Furlough or does it just continue?
- In Admin/CVL does Furlough continue from oldco to newco?
- Can a company force employees to take holiday during furlough leave ?
- Can a director who acts as an employee and is on PAYE be furloughed?