Furlough and Job Retention Scheme FAQ's - UPDATED
The first blog that was posted on 24th March was shortly after the Government announced its first plans to help support organisations retain employees for an extended period of time. Since then, there have been many new developments and new pieces of legislation that have meant more changes for employers to keep up with.
I am going to try and condense it down for you and provide some guidance and answers on frequently asked questions.
Furloughed Leave – What is it?
By putting staff on furlough leave, this means that you can claim for 80% of their salary under the job retention scheme whilst doing no work for you. This is a really important part of furlough leave – staff are to do NO work for you as their employer during this time. Staff have to be put onto furlough leave for a minimum of three weeks at a time.
The term furlough is very new to the UK and is typically something used in the US. Furloughing staff enables businesses to retain them without having to make layoffs or redundancies.
It is really important here to note that on 15th April 2020, the Government released a Treasury Direction on the Scheme. It stated that employers must have agreement in writing that the employee will cease to do all work for the duration of furlough.
Employers should confirm the employees’ new status and obtain their consent in writing, including confirmation that the employee will cease all work in relation to their employment. Any records should be kept for five years.
Although staff are unable to do any work from the employer they are furloughed from, they can take up a second, or third job and earn an income from there. There is no restriction on hours worked with another employer, as long as they are working for someone who has not put them onto a period of furlough leave, this is ok.
Coronavirus Job Retention Scheme (CJRS)
The HMRC opened the system for employers on Monday 20th April to start claiming for 80% of each employees wages under the job retention scheme. The scheme has been extended until the end of June 2020. You as an employer do not have to pay 100% of their wages and you are only able to claim for 80% of their salary. If you are in a position to pay the additional 20% then this is absolutely fine, however there is no obligation to do so.
You also do not need to worry about national minimum wage when claiming under the scheme. Minimum wage applies to hours worked. So if employees are furloughed and do not work and 80% of their normal earnings would take them below the NMW, this is fine.
Any member of staff can be claimed for, whether they are part time, full time, agency worker, zero hours worker – anyone can be claimed for – however bear in mind qualifying dates shown below.
The pay that you claim for for each individual are all elements that you are obliged to pay your employees, including wages, past overtime, fees and compulsory commission payments. You cannot claim for discretionary payments i.e. bonuses.
All payments made to furloughed employees will be subject to PAYE and National Insurance contributions.
Qualifying Dates
The scheme is open to all UK employers that had a PAYE scheme in place on or before 19 March 2020, have enrolled for PAYE online and have a UK bank account. Any organisation with employees can apply, including charities, not for profit organisations and recruitment agencies.
Staff have to have been on the company’s payroll and an RTI submission made to the HMRC on or before 19th March 2020. If you had new employees that joined at the beginning of March, but weren’t on your payroll until the end of the month, they will unfortunately fall out this extension that the Government confirmed.
Sickness and SSP
Statutory Sick Pay cannot be claimed for under the CJRS. On 9th April 2020, it was confirmed that the employer can decide whether to place a sick employee either on SSP or furlough them. This includes those that are already off sick, including those off on long term sick. You cannot have someone off sick and furloughed, it has to be one or the other.
Government guidance on those who are shielding now states that those who are shielding can be furloughed if they are unable to work. Previously, these employees could only have been furloughed where an employee would have been made redundant.
Annual Leave
Annual leave whilst staff are on furlough leave will continue to accrue as they will still be employed with the business. It was confirmed on the 17th April 2020 that annual leave can be taken at the same time as someone is on furlough leave…however annual leave has to be paid in FULL and therefore you will need to top up the additional 20% to bring them up to 100% as you cannot claim for annual leave.
It is also worth noting here that the Working Time Regulations 1998 have recently been amended to allow for four weeks of leave to be carried over into the next two leave years where leave could not be taken due to coronavirus. This now means that all statutory minimum annual leave can be carried over. Carry over of any contractual leave in excess of the statutory minimum is subject to agreement between employer and employee.
This extension to the carry over rules means that it is less of a concern for employers that employees have a potentially large amount of backed up leave to take once the pandemic passes.
It is currently still unknown whether an employer can ask employees to take annual leave during furlough so my advice would be for you to not go down this route currently. It is not worth the Employment Tribunal case at the end!
Furlough and Maternity Leave
Anyone who is due to go on maternity leave will continue to do so as normal. It was confirmed by the Government on 24th April that where statutory maternity leave begins on or after 25th April, entitlement to SMP will be calculated on the employees normal, full earnings rather than their furlough pay.
The same applies for those on paternity leave, shared parental leave, adoption leave and parental bereavement leave.
Statutory Notice Pay
If someone is serving their notice during a period of furlough, their statutory notice pay will be protected, and therefore required to be paid in full.
Probation Periods and Coronavirus
Where you have members of staff who have recently joined and are either on furlough leave or working from home, it may be a sensible idea to extend their probation periods. It would be unfair on both sides for a probation period to either be passed or failed given the current circumstances. If this applies to someone in your business please let me know and I can send you a template letter to extend the probation period for the reason of coronavirus.