Furlough Leave – the latest on the Coronavirus Job Retention Scheme

 

The speed of the introduction of Furlough leave left many questions unanswered last week. As promised, we’ve rounded up some further details for you, as more information about the scheme has become available.

Furlough leave has been introduced by the Government as a job retention scheme for those who would otherwise have been laid off as a result of the Coronavirus pandemic. Queries on the Scheme and associated matters have been coming into us thick and fast since it was introduced on 20 March so here’s the latest round-up.

 

Do we have any more detail about the Scheme?

Yes. HM Revenue and Customs (HMRC) published further guidance on the Coronavirus Job Retention Scheme on 26 March 2020 which goes some way in answering your queries. It is unclear whether HMRC intends to rely on this guidance only, or whether there will be actual legislation put in place.

 

Are regular bonus or commission payments being included in the 80% amount?

No. The updated guidance states that employers can claim a grant from HMRC to cover 80% of an employee’s regular wage, or £2,500 per month, whichever is lower. In addition to this, they can claim the employer national insurance contributions and the minimum automatic enrolment employer pension contributions that they are liable to pay on the subsidised wage. Fees, commission and bonuses however should not be included in the calculation of the wage costs.

 

Does the Scheme apply to short-time working? (So if an employee is working 50% of their normal time can the employer apply for 80% of the short-time 50% of wages?)

No. The Scheme only applies to those whose role would otherwise have been fully laid off and so only applies to those who will not work for the entirety of their furlough leave.

 

Can we put new recruits on furlough leave?

No. Employees hired after 28 February 2020 cannot be furloughed. This also adds an element of difficulty for employees who have transferred under TUPE after 28 February 2020 as they will not have been on the employer’s PAYE system at the time to entitle them to furlough leave. Our view is that this was an unintentional oversight in respect of employees who transferred under TUPE and this may well be rectified – watch this space.

 

Can I furlough an employee who has more than one job?

If your employee has more than one employer they can be furloughed for each job. Each job will be treated separately and the cap applies to each employer individually.

 

Can a furloughed employee take part in volunteer work or training?

Yes. A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation. We hope that this will mean that apprentices can continue with the training element of their apprenticeship, if the training provider is equipping them with remote learning. Again, we are awaiting confirmation of this.

If workers are required to complete online training courses whilst they are furloughed, then they must be paid at least the national minimum wage for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

 

Can you force an employee to take furlough leave?

Yes, if their contract of employment has a clause which allows you to lay off the employee. In the absence of such a clause, if you are intending to pay them in full we believe the risks of enforced furlough leave are relatively low – please do take advice if you consider this may be necessary. We do consider that most employees will agree to be furloughed given the alternative is likely to be redundancy.

 

How long is furlough leave?

Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.

 

Can you rotate furlough amongst employees?

There is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks.

 

How is the 80% calculated for those with irregular earnings?

You can claim for the higher of (i) the same month’s earning from the previous year (e.g. earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year.

 

Does the 80% means an employee might get paid less than the national minimum wage?

It could. So if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working.  However, they are entitled to be paid national minimum wage for any time spent training.

 

Does holiday continue to accrue during furlough?

Yes although we consider that it will only accrue at the statutory rate under the Working Time Regulations. Please ask us for further advice on this point.

 

Can we ask employees to take annual leave on full pay whilst on furlough? Yes, provided you give them the required amount of notice (twice the amount of time as the leave e.g. you need to give two weeks’ notice for one week’s leave). For those who are coming to the end of their holiday year you need to ensure that they have sufficient holiday accrued.

 

Do we have to pay full pay for taking annual leave whilst on furlough?

This is interesting and has not been provided for in the guidance. Case law makes it clear that the whole purpose of working out what normal for holiday pay comprises is to ensure that employees aren’t disincentivised from taking holiday by being paid less when they’re on holiday than when they’re at work, or — as it would be — on furlough. That suggests that 80% pay will be adequate because they’re not being disincentivised from taking holiday because they’re being paid the same as they would be if they were on furlough.

 

Can you continue with disciplinary or grievance proceedings when an employee is furloughed?

Whilst not currently provided for in the guidance we believe the legislation will provide for a similar scenario to that of an employee on maternity leave allowing for such proceedings to continue whilst on furlough leave.

 

When can we claim?

The online service you’ll use to claim is not available yet but we are informed that HMRC expect it to be available by the end of April 2020. You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for.

 

How do we claim?

The furlough scheme amounts to a change to the employment contract and ideally it should be by agreement, so a discussion with affected staff is the first step. We can help you with the process of varying the contract. If the number of staff involved is greater than 20, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

To claim, you will need:

  • your ePAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number

You’ll need to calculate the amount you are claiming and it makes sense to check this carefully as HMRC has stated that it will retain the right to retrospectively audit all aspects of your claim.

We hope this has provided you with helpful additional pointers. Please do contact us for specific advice on your particular issues, including assistance with drafting ‘furlough letters’ for staff.

If you would like further advice tailored to your particular circumstances, please contact us.