Furlough: written agreement not necessary

HM Revenue & Customs has clarified that employees do not need to have provided a written agreement to stop working for them to be placed on furlough.

It issued the clarification after there appeared to be a discrepancy between the information in a Treasury direction issued to HMRC, which said employees had to agree in writing to cease all work, and in HMRC guidance to employers, which stated that written agreement from the employee was not necessary; only a written record of a conversation having taken place.

Many employers were worried that they would not be able to make a claim for 80% of furloughed employees’ wages under the scheme because they did not have a written agreement in place when staff stopped working.

However, in a letter circulated by employment law barrister Daniel Barnett from Outer Temple Chambers, HMRC said workers did not need to provide written agreement before could qualify for furlough under the Coronavirus Job Retention Scheme.

The letter says: “Employers should discuss with their staff and make any changes to the employment contract by agreement. To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. If this is done in a way that is consistent with employment law, that consent is valid for the purposes of claiming the CJRS.

“There needs to be a written record, but the employee does not have to provide a written response. A record of this communication must be kept for five years.

“Put simply, the employer and the employee must reach an agreement and an auditable written record of this agreement must be retained. It does not necessarily follow that the employee will have provided written confirmation that such an agreement was reached in all cases.”

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The letter, sent by an HMRC staff member who works closely with chief executive Jim Harra, said the government would issue further clarification if necessary.

On the first day of  the CJRS portal opening, more than 140,000 employers made claims under the scheme in respect of more than 1 million jobs.