Need legal advice relating to Furlough? Read our Q&A relating to furlough of employees in the coronavirus pandemic.
In terms of Furlough pay further information is now on the government website and we will be circulating an Employers Q&A picking out relevant aspects of the new government guidance to follow this update.
Further via a legal commentator and Barrister Daniel Barnet an FAQ which had been sent to him from Dr Luke Evans MP has been published and circulated.
The FAQ main detail is cited below for your perusal:
- Any large or small employer can apply to put workers on temporary leave or “furloughed” status. The government will then pay them cash grants of 80 per cent of their wages up to a cap of £2,500, providing they keep the worker employed. They will receive the grant from HMRC. All UK organisations can self-certify that it has furloughed employees. The scheme will cover the cost of wages backdated to March 1st.
- All UK-wide employers with a PAYE scheme will be eligible, including the public sector, local authorities and charities.
The scheme will be open initially for at least 3 months. But we will extend it for longer if necessary. There is no limit on the amount of funding available for the scheme. We expect the first grants to be paid within weeks. HMRC are working night and day to get the scheme up and running and we’re aiming to get it done before the end of April. Existing systems are not set up to facilitate payments to employers.
- Do individuals still have to pay tax on this?
Yes – individuals will pay Income Tax and National Insurance on any payments received through this scheme as they are replacement for income in line with normal practise for benefits or grants that replace income.
- Will this cover the cost of employer National Insurance contributions and employer pension contributions?
Yes – employers will be able to apply for a grant to cover the Employer National Insurance contributions and minimum automatic enrolment pension contributions on paying the lower of 80% of regular salary or £2,500 per month.
- How will this work for those on zero-hour/flexible contracts/agency workers?
This scheme aims to support all those employed through the PAYE system regardless of their employment contract, including those on zero-hour contracts. Zero-hour and flexible contracts can cover a whole range of working arrangements. The 80% grant is applied to the higher of: (1) the earnings in the same pay period in the previous year; or (2) the average earnings in the whole previous 12 months (or fewer if they have worked for less time than this, including a part month calculation if they were taken in February).
- Can a business furlough someone after hearing the announcement and then claim back to March 1st even though they had been working that whole time?
No – the scheme is backdated to March 1st with a view to covering those who have already been made redundant as a result of the coronavirus.
- What about employees taken on after 1 March?
They are excluded from the scheme.
- To qualify, does the business need to be ‘essential’?
No, all businesses which employ and pay workers through the PAYE system are eligible.
- Why are you not supporting me if my hours are reduced?
The scheme is designed to help those who otherwise would have been made unemployed. We recognise that some people will work fewer hours. We have strengthened the welfare system to support those whose hours change including an increase to the UC standard allowance and the working tax credit basic element. This builds on the initial package announced at Budget including enhancements to contributory employment support allowance, which will now be available from day 1and making advances for all new UC claimants available online with no requirement to attend a job centre. Why isn’t this supporting part-time working? The scheme is designed to help those who otherwise would have been made unemployed. The public health guidance is clear that people should stay at home unless they are a key worker.
- Can my employer top this up?
Yes. In order to qualify for the scheme, employers must pay their staff at least 80% of wages, up to the cap of £2,500 per month. It is up to them if they wish to top up the additional 20 per cent.
- What about employees that have already been made redundant?
The scheme will be back dated to March 1 with a view to covering those who have already been made redundant due to the Coronavirus outbreak. If firms re-employ staff made redundant after March 1st, they are eligible to then be furloughed and the employer would qualify for the grant.
- Can my employer sack me while I’m on furlough? Is my employer allowed to sack me as soon as the furlough scheme comes to an end?
Yes, you can still be made redundant while on furlough or immediately after. There is no requirement to bring the employee back to work after the period of furlough. If an employee is made redundant during the period of furlough then grant payments will cease. However, in both cases normal redundancy rules and protections will apply. Where a business feels that redundancy is the only option, this must still follow the rules which include giving a notice period and consulting staff before a final decision is reached. More information on redundancy can be found at: https://www.gov.uk/redundancy-your-rights
- Can I be furloughed for a short period of time, e.g. a week or a couple of days, and then re-employed?
A worker must be furloughed for a minimum of 3 weeks for their employer to be eligible to claim under this scheme. This is consistent with the public health guidance seeking to minimise the number of people outside of their homes on a regular basis. The scheme supports employers asking the maximum number of employees to remain at home during the coronavirus outbreak. A clear minimum period also aids a clear definition of who is and who is not furloughed.
- Can I volunteer or do training whilst furloughed?
If you are furloughed you cannot work for your employer during this period. You can volunteer or train, provided that this does not involve the manufacture or creation of an item or part thereof than can yield revenue for the company, the provisions of services to the company, or the provision of any service that can yield revenue for the company. Firms can require workers to undertake training from home, provided it meets the above.
We hope you found this update useful. If you do require any further help or assistance on employment law matters, our contact details are below.
Further guidance has been issued today and can be found here:
Main headlines include:
- 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; however, the government does not expect public sector employers to use it as long as central government continues funding wage costs in the normal way. With agency employees, the scheme is only available for agency employees who are not working.
- Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum auto enrolment pension contributions on that wage. Fees, commissions and bonuses are not included.
- An employer can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements)
- For employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (eg 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 are entitled to be paid NMW for any time spent training.
- To be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put
On the scheme
- Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding
- 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 an hour (presumably 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. The employer must be careful not to discriminate in deciding who to offer furlough too. Prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s (direct age discrimination against those under 70) is almost certainly justifiable, and those who do not suffer from serious health conditions are not a protected class.
- Employees on sick pay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding 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 once every three weeks, ie they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
- The government 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.
- Please note – this guidance is not intended to be taken as legal advice – for individual situations you will need to take specific legal advice.
- The information in this guide is correct as of 27th March 2020.
- All advice given should be read alongside the Government Guidance
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