Please note that this note was produced on Monday 6th April and is likely to become outdated with ever changing Government measures and guidance. Please check with your Accountant and against Government guidelines when looking to adopt Furlough Leave.
On Saturday 4th April, the Government updated the regulations relating to its job retention scheme to support employers and employees through these unprecedented times. At the moment the details still require some detailed clarification and the HMRC portal to claim ‘wage’ support is not up and running, it is scheduled to be open by the end of April. However, the financial support can be backdated to 1 March for businesses who have already had to send employees home.
So, what is ‘Furlough Leave’?
Furlough Leave isn’t a UK Employment Law phrase and is a new phrase adopted from an American word used in situations where we would say “leave from work”, or “sabbatical”.
For the avoidance of doubt, in order for an employee and employer to qualify for Furlough Leave, the employee must be sent home, it is not available to employers where the employee continues to work.
It is intended to be a job retention scheme to pay employees who would otherwise be laid off [or made redundant].
Can every employer claim it?
If you employ employees and you send them home, then yes. So, that’s any employer, whether they are a sole trader, partnership, Ltd Company or LLP.
Can an employer enforce an employee to go on Furlough Leave?
The government has suggested that there is a preference for agreement to be gained in order to implement Furlough leave. However, in practical terms, the real options for the employees are:
- Agree to Furlough Leave; or
- Be at risk of being made redundant.
Where there is a contractual short time working or lay off contractual clause, this may be relied upon but please take advice before imposing.
All employees must have received notification of Furlough status in writing and a record of this must be kept for a period of 5 years.
Can an employee work part time and the other part on Furlough Leave?
No, the requirement is that the employee should not work for three consecutive weeks for their employer in order to qualify for Furlough Leave.
However the government has confirmed that an employee can be furloughed more than once as long as each furlough period lasts for three consecutive weeks.
How does an employer select for Furlough Leave?
There are currently no guidelines regarding this issue and if a business has not been closed through Government measures then it would be sensible to adopt a selection criterion similar to that when selecting for redundancy. This should be based on objective criteria such as appraisal records, business specific skills, productivity records, dual process trained etc.
Unfortunately, there may be some employees who aren’t thinking of the greater good. So, the basic scoring gives you a fair basis for selecting people for redundancy if they don’t agree to Furlough.
You always have to be careful of discrimination, but there may be some parents or carers who would welcome Furlough Leave due to caring for children or others they have responsibility for.
If an employee is selected for Furlough, then you should notify an employee of their selection, if through their agreement or where you have had to negotiate it.
Which employees are eligible to be selected for Furlough Leave?
The employee must have been employed on the 28th of February 2020 in order to qualify.
The employee must be paid through PAYE to be eligible so the scheme may be open to some non-employees that are classified as workers and meet the qualifying conditions.
Employers can rehire those dismissed after 28th February 2020 (not just those made redundant)
Does the employer have to top up the 80% wage to 100% for a Furloughed Leave employee?
No. It can choose to do so but is not compelled. It would in our view be sensible to get written consent not to top up the 80% to 100%. Who knows there could be a risk of employees’ making claims for unlawful deduction of wages? One would hope that employees wouldn’t be successful given the state of society at the moment, but who knows!
If not topping up, getting written express consent, could help down the line.
If an employee refuses Furlough can we make them redundant.
Yes, subject to ordinary fair redundancy processes and selection.
How does an employer get the subsidised wages back from the Government?
The Government is setting up an online HMRC portal, scheduled to be live at the end of April 2020. We understand the outline process to be (again this may change):
- Select your employee(s) for Furlough Leave
- Gain written consent from employees to 80% pay or the cap of £2500 per month (presuming gross)
- Confirm in writing to employees being placed on Furlough Leave
- Send all Furloughed Leave employees’ home and stop them carrying out any work
- Complete application for Furlough Pay for all affected employees using HMRC Portal (when ready….)
- Remain in contact with employees on Furlough Leave
- Continuously review Government updates on Furlough Leave employees to understand changing picture (this advice will out date daily we suspect!).
Furlough Leave pay will be 80% of normal wages. However, there will be a cap of £2500 per month, which is the figure being paid to the employee, not the normal wage. The employer will also be able to claim the associated NI contributions and minimum enrolment pension contributions.
Those awkward employees
Seek advice and consult to get agreement as a basic guideline.
Note: employers think carefully about your use of the scheme, any abuse is likely to result in high sanctions which could end your business anyway!