13 May 2020
First published 31st March 2020. Last updated 13th May 2020 at 10:30.
Following the announcement of the Job Retention Scheme on 20th March, the government has released updated guidance on eligibility and use of the scheme.
We’ve opened our HR helplines to give employers affected by COVID-19 access to a free advice call. So, for fast answers to questions on furloughs, lay-offs and the Job Retention Scheme, speak to an expert today on 01455 858 132.
The Job Retention Scheme
What is furlough leave and the Job Retention Scheme?
Its the government’s new scheme that will pay most of an employee’s wages while they are on furlough leave. But what exactly is a ‘furloughed employee?’
Normally, an employee on furlough takes a period of temporary leave and receives no pay. They stay on your books, and you can bring them back in when you need them.
The furlough leave government announcement is called the Job Retention Scheme. And, if you need to furlough employees due to the COVID-19 crisis, the “no pay” element will be overridden and the government may cover 80% of your employees’ wages up to £2,500 per employee per month.
Which employees can I furlough?
You can furlough any worker who was on the organisation’s PAYE on 19th March 2020, and had been notified to HMRC via a RTI submission on or before 19th March.
All PAYE workers are eligible to benefit from the grant, including those on zero-hour or temporary contracts.
Provided they are PAYE, you can also furlough salaried directors, members of LLPs, apprentices and those who fall into the employment status of ‘worker’.
The grant will cover the period from the day employees are furloughed and can be backdated until 1st March 2020.
Some organisations receive public funding specifically to provide essential services. These organisations should continue to use that funding to pay staff and should only seek to use furlough in limited circumstances.
How do I apply for the government grant?
Firstly, you must designate which of your employees you want to furlough. Next, you must submit this information to the HMRC. You must also submit the employees' earnings. This can be done through HMRC's online portal. Then, you'll receive a grant to cover 80% of their wages.
When will I receive the government grant?
You can make a claim to HMRC’s online portal now for all of your furloughed employees, provided there has been a minimum of 3 weeks consecutive furlough for each employee claimed for. Grants can take up to 6 days to be paid in your organisation’s bank account. The scheme will run until the end of October 2020; it will remain unchanged until the end of July but changes will be made from August to allow for more flexibility for employers who bring employees back from furlough on a part-time basis. More information on this is due by the end of May.
What’s the shortest amount of time I can furlough someone for?
Three weeks, assuming you want to be able to claim the government grant.
Am I able to force employees to furlough?
You can only force employees to furlough if it says so in their contract. Assuming this isn't the case, you'll need your employees' agreement to furlough them and reduce pay before you do.
It's unlikely that your employees will say no if the alternative is unpaid lay-off or redundancy.
Can I furlough someone again if they’ve already been furloughed?
The latest guidance indicates yes. This means you have the freedom to rotate employees around periods of work and furlough.
However, bear in mind that each period of furlough must be at least three weeks long. And, when employees are on furlough, they cannot do any work for you.
Am I able to furlough people on sick leave?
If an employee is on sick leave, you can decide whether to continue with sick leave or furlough them. The two cannot be taken at the same time. If you decide on sick leave (and therefore paying SSP), you cannot claim wages via the Job Retention Scheme. However, you may be able to recover the SSP.
To reiterate, an employee cannot be put on furlough leave for coronavirus and also sick leave. Decide on one approach or another and let the employee know.
Do I have to pay wages to employees first before claiming back?
Generally yes, if you have the funds. The grant will act as a reimbursement of wages paid.
What parts of wages can I claim?
Anything you are obliged to pay the employee. You can’t claim for discretionary elements, such as bonuses or commission. Non cash benefits and benefits in kind are also excluded.
Can I offer someone work during furlough?
A common question our advisers receive is “What are furloughed workers able to do in terms of work?”
The answer is nothing. Under no circumstances must the employee undertake work for you while on furlough. The latest guidance provided has clarified that employees cannot work for any business linked or associated with you (the employer) either.
Can the 80% wage fall under National Minimum Wage/Living Wage?
Yes, it can. National Minimum/Living Wage is a rate payable for hours worked. Because no hours are worked during furlough, the minimum rates don't apply.
Do I have to let ex-employees come back if they ask?
No. You can re-hire and furlough any ex-employees who left after 28 February 2020 provided the employee was on your payroll on 28 February 2020 and had been notified to HMRC on an RTI submission on or before 28 February 2020. You can also re-hire and furlough any employees who left after 19 March 2020 provided the employee was on your payroll on 19 March 2020 and had been notified to HMRC on an RTI submission on or before 19 March 2020.
Can my employees get a new job somewhere else when on furlough with me?
Possibly. Your normal rules on getting other employment will still apply. You’ll want to make sure that the new work doesn’t create a conflict of interest and you might want to put some extra rules in place about making sure your staff make themselves available when you need them again.
I need to make someone redundant on furlough. Can I do this?
Yes, but you must follow fair procedure, including adequate consultation and notice.
What’s the position with employees who are ‘shielding’?
Employees who are more vulnerable due to an underlying health condition may have received a letter from the NHS to take more serious social distancing measures. These employees are “shielding.”
Previous guidance stated that you can furlough these individuals if they are unable to work from home and you would otherwise have to make them redundant. However, further Government guidance has been provided, stating the employees don’t have to be at risk of redundancy to be furloughed.
What about apprentices?
Apprentices can be furloughed in the same way as other employees. They can also continue training while furloughed.
If you wish for them to continue training you must provide at least the appropriate minimum wage during this period. That means you may have to pay that which isn’t covered by the 80% reimbursement. Breaks in learning may be appropriate depending on your situation.
It’s possible to make apprentices redundant, however, you should seek out advice on this as different rules may apply in different parts of the UK. Call Croner on 01455 858 132 to receive expert HR advice on this today.
If you are subject to the apprenticeship levy payment, you must continue to pay this as normal; it isn’t recoverable under the scheme.
Can I furlough agency workers?
If you’re an agency, you should agree furlough with your agency workers. It’s best to discuss it with the end user employer too. The same conditions apply to agency workers as regular employees. They must undertake no work for you during furlough.
Does annual leave accrue during furlough?
Statutory minimum annual leave entitlement will continue to accrue. You may try to block accrual of anything above statutory minimum, but would need the employees’ agreement to do so. This may provide a blocker for them agreeing to furlough.
For more on furlough leave and annual leave, check out our Mythbuster here.
Can employees take annual leave while on furlough?
Yes, but you must pay normal wages for annual leave during furlough.
Claim your free advice
The situation in the UK is changing fast, so keep checking the GOV.UK website for the latest guidance.
In the meantime, to get specialist advice on how to furlough employees and manage the impact of COVID-19 on your business, call our HR advice line for free on 01455 858 132.
Disclaimer: This blog was posted on the 31/03/2020. As the situation in the UK is developing rapidly, always remember to check in with your HR adviser or the gov.uk website for the latest updates.
Do you have any questions?
Get a free callback from one of our regional experts today