Furlough leave government guidance
Coronavirus job retention scheme – government guidance
The government has published further details of the Coronavirus Job Retention Scheme (otherwise known as the Furlough Scheme).
HMRC may intend to rely on this guidance only without there being subsequent legislation. We simply don’t know yet.
Below is a summary of the key points, some of which had not previously been announced. It should be stressed that this is only a summary. You may therefore also want to read the full guidance from the government’s website.
-the scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020.
-any organisation with employees can apply, including charities, recruitment agencies and public authorities. The scheme is also available for agency employees who are not working.
-employers will be able to reclaim up to 80% of wage costs up to a cap of £2,500 per month, in addition to the employer NICs and minimum auto- enrolment pension contributions on that wage. Fees, commissions and bonuses are not, however, included.
-an employer can choose to top up to 100%, but does not have to, This will be a matter of negotiation between the parties, even though an employer would be in breach of contract (in the normal way) if it is decided not to make the top up payments. Employees should surely think carefully before taking any legal action if a cash-strapped employer is unable to meet the payments, in case they are fast-tracked out on a redundancy or perhaps an employer may be forced to close for good.
-for employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (i.e earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year.
-individuals are only entitled to the minimum wage for the hours they work. 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 would be entitled to be paid NMW for any time that is spent training.
-to be eligible, the employee must have been on the payroll on 28th February 2020. They are not eligible if they started work later than this date. If any employee was on the payroll on 28th Feb and has since been made redundant, they can be rehired at the employer’s discretion and put on the scheme.
-furlough leave must be taken in minimum blocks of three weeks.
-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.
-the employee must not be working at all. If they work for even for a short period of time during their entire three week furlough period, they are not eligible. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
-when agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies. An employer must be careful not to discriminate in deciding who to offer furlough too. This means they should for example, refuse to offer furlough to someone because they have a disability or because of their race. Having said that, if more vulnerable workers were prioritised (such as the older workers and those that suffered with health issues), this may well be justifiable and not held to be in breach of equality laws.
-employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding (that is, needing to stay at home for 12 weeks because you are in a higher risk group) can be placed on furlough.
-employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed.
-employers can only claim furlough for their employee once every three weeks, in other words they cannot get a weekly reimbursement. Claims will be able to be backdated to 1st March 2020.
The government says it will issue further guidance on the mechanics of claiming the payment in due course. It says it expects the scheme will be up and running by the end of April.