Vestd's view on EMI schemes for furloughed employees

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We believe that EMI schemes should not be compromised by the furlough process, which is intended to be a temporary outcome aligned to the Covid-19 response measures being implemented by the government, along with the consequential impact on business.

Employees on furlough due to these measures should remain eligible for EMI, as they remain employed and paid via PAYE by their employer for at least 80% of their hours (albeit that these costs are recompensed in part or in full by the government). They are not leaving the business, so their options will not lapse, nor should they be disqualified.

Importantly, the working hours requirement for EMI should not be affected, as furloughed employees remain bound by their contractual obligations with their employer, which includes conditions on working hours.

Furloughed employees are entitled to seek additional work for another company, but they are prevented from doing so during their core working hours.

The only consideration would be if employees take on other jobs that constitute more than 25% of their working time (based on their set contract hours in their current employment). This would be classified as a ‘disqualifying event’ for EMI, unless HMRC waives this rule for furloughed employees who need to top up their wages.

We request that HMRC clarifies its position on the furlough process, so that those people affected can make the right judgement. Employees have to agree to be furloughed, so those with EMI options need to understand whether or not it makes sense for them to accept the offer of furlough from their employers.