New furlough guidelines are out – and it is excellent news!

Because they confirm what we knew all along: contracts can indeed be renewed (even if they have expired) and workers can be put on furlough until the end of the scheme (currently the end of June).

Despite all the chaff thrown into the air by PACT over the past two weeks, this is confirmation of the details contained in the email sent to the Watercooler in rapid response to the question asked of the Director of Covid-19 Policy Coordination on Tuesday.

Specifically, these are the parts of the PACT guidance which do not apply:

“Where a fixed term contract has ended naturally, an employer cannot re-engage that individual and furlough them under the scheme”.

The new guidelines are much clearer that the above does not apply, endorsing what HMRC Customer Support have been saying repeatedly over the past two weeks:

An employee on a fixed term contract can be re-employed, furloughed and claimed for if either:

their contract expired after 28 February 2020 and an RTI payment submission for the employee was notified to HMRC on or before 28 February 2020 (or)

their contract expired after 19 March 2020 and an RTI payment submission for the employee was notified to HMRC on or before 19 March 2020

If the employee’s fixed term contract has not already expired, it can be extended, or renewed. You can claim for them if an RTI payment submission for the employee was notified to HMRC on or before 19 March 2020″.

There is also no mention of there having to be work for the freelancer to return to, as specified in PACT’s guidance:

(There must be) “some remaining work still to be done under the contract, and the prospect of returning to complete that work at some point in the future”.

It is also not the case that the worker’s contract itself must have ended due to Covid-19, only that the employers’ business in general must have been affected (which is clearly the case where pretty much all commissions have dried up due to lockdown). Here is what the guidance says about that:

“It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus”

All in all then, a great result and clear freedom for companies to do what almost all had been striving hard to do: to furlough as many freelancers as they possibly can.

No doubt PACT will be racing hard to amend its guidance so it fits in with what the government guidelines actually say. It took them one day to change them last time, let’s see if they will be inclined to be so fast this time…