Posted on 2nd April 2020
Various media outlets are, understandably, currently full of reports and information about the ongoing Coronavirus (COVID-19) pandemic. It’s vital in times such as these that you ensure your information is obtained from a reputable source and guidance around employment and employment law are no exception.
We’ve put together a list of common questions and answers, which may be useful to employees and employers.
The following information, which relates to England and Wales only, was correct as at 24 May 2020 and will be regularly updated to reflect changes.
What does ‘furlough leave’ mean?
Furlough leave is where an employer asks an employee to stop working but the employee is kept on the payroll.
What is the Coronavirus Job Retention Scheme?
Businesses that, because of the Coronavirus, are unable to operate or have no work for their staff, can consider placing eligible employees on furlough leave and, under the Coronavirus Job Retention Scheme, will be able to claim 80% of their furloughed employees’ wages, up to a maximum of £2500 per employee.
To be eligible, employers must have had a PAYE payroll scheme in place for the designated employee on or before 19 March 2020 and also have a UK bank account.
Not all employees will be eligible and employers must also ensure they comply with all relevant employment law, including the employees’ contracts of employment.
How do I know which staff are eligible?
To be eligible, an employee must have been on the employer’s PAYE payroll on 19 March 2020 and HMRC must have been notified on an RTI (Real Time Information) submission on or before 19 March 2020. The employee must have been selected and informed and be placed on furlough leave for a minimum of three weeks.
What about employees on sick leave or who are self-isolating?
Employees on sick leave or self-isolating should receive Statutory Sick Pay or Company Sick Pay, depending on their contract of employment, but can be placed on furlough once this has ended.
What if an employee was made redundant after 28 February 2020?
Under the scheme, employees can be re-employed and then placed on furlough leave, as long as the employees were on the payroll on 28 February and had been notified to HMRC on an RTI submission on or before 28 February 2020, however the employer does not have to agree to re-employ the employee. It is the employer’s decision whether or not to place an employee on furlough leave.
What is the process to place an employee on furlough leave?
Employers need to fairly select and inform employees about being placed on furlough leave. If an employee’s contract of employment does not include a lay-off clause allowing the employee to be laid off, agreement should be obtained in writing from the employee, including details of changes to pay if it is to be reduced to 80%. Employers must obtain agreement, if not already covered by the employee’s contract of employment, confirm employees have been furloughed in writing and keep a record of this. The record must be kept for five years.
Can part of a workforce be placed on furlough leave and not others?
Yes, but employers should ensure employees are selected fairly for furlough leave being mindful not to discriminate.
What’s the minimum and maximum time an employee can be furloughed for?
Employees can be furloughed for a minimum of three weeks and currently the scheme will be in place until 30 June 2020. Although the scheme has been extended until the end of October 2020, the scheme will change after 30 June 2020. No further details have yet been provided.
How do I make a claim through the Coronavirus Job Retention Scheme for employee’s wages?
Employers will be required to make claims through the Scheme, employees cannot.
Claims can be made through the online portal. Go to https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme for the latest information and more details on what information will be needed to make a claim.
Employers will need to calculate pay for those furloughed and can claim 80% of their employees’ regular pay (this can include past overtime, fees and contractual commission payments but not benefits in kind eg health insurance nor discretionary bonuses, tips nor discretionary commission payments) up to a maximum of £2500 per employee.
Employers will still be liable to pay Employer National Insurance contributions and the minimum automatic enrolment employer pension contributions, but these amounts can be added to the claim made to HMRC.
Can I pay my employees full pay on furlough leave?
Yes, employers can choose to continue to pay those employees on furlough leave full pay if they choose to do so, however, they will only be able to reclaim 80% of this through the Coronavirus Job Retention Scheme.
Can I ask those on furlough leave to take annual leave?
Yes, if you give twice the required amount of notice ie for one week’s annual leave you would need to provide the employees with two weeks’ notice. If an employee is on annual leave or there is a Bank Holiday whilst on furlough leave, the employee is entitled to receive the holiday and this must be paid at full pay if considered to be an employee's statutory annual leave entitlement. Employers must ensure the employee receives 100% of their salary for annual leave or a Bank Holiday rather than the 80% an employee receives on furlough leave.
Can those on a zero-hour contract be placed on furlough leave and how much would they get paid?
The scheme covers full-time and part-time employees and those on temporary, zero-hours, agency or flexible contracts.
My employees are working on reduced hours. Can they be placed on furlough leave?
If an employee is working, but on reduced hours, they will not be eligible for the Scheme.
I’ve been placed on furlough leave by my employer, can I work for another business until I can return to my old job?
Firstly, the terms of your contract of employment may prevent you from working for another employer whilst still employed by the company that has placed you on furlough leave so please check the terms of your contract of employment. Updated guidance on 4 April 2020 confirms employees can work for another business whilst placed on furlough leave. Again, check your contract of employment as there may be a clause requesting that you inform your employer and obtain your employer's consent. Should your contract of employment contain a clause requiring your employer's consent before you work for another business and you do not inform your employer, you could be subject to disciplinary proceedings.
What happens to my employment rights whilst I am on furlough leave?
All your employment rights are retained.
Can I ask to be placed on furlough leave?
You can, but it is your employer’s decision whether or not you will be placed on furlough leave. An employer should carry out a fair selection process for those being placed on furlough leave ensuring there has been no discrimination.
If I am placed on furlough leave who pays my wages?
If you are placed on furlough leave under the Coronavirus Job Retention Scheme, you will still be paid by your employer and all normal deductions including tax and NI, will be made. Your employer will then claim this amount back from HMRC through the Scheme.
Can I still do part-time work for my employer whilst on furlough leave?
No, if you are on furlough leave you cannot undertake any work for your employer.
What happens if I already work for more than one employer?
It is possible for one or more of your employers to put you on furlough leave if you are eligible. They will continue to individually pay you 80% of your wage, up to a maximum of £2500 from each employment. If one of your employers does not place you on furlough leave, you may continue to work for them, even if you have been placed on furlough leave from another employer.
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