With partners HR Champions and valuable input from employment lawyer and Barrister Luke Menzies and Kim Whalen-Blake from Hughes Patterson we had lots of discussions this week on a word that has sprung from nowhere that we have all got very used to using in a very short space of time! How and when do we ‘Furlough ‘ our staff?
Latest update from HR Champions:
Thanks to the Government Coronavirus Job Retention Scheme (CJRS), we’ve all learned a new word this month, ‘Furlough’. Through the CJRS, employers now have the option to furlough workers and claim back 80% of their employment costs from the Government rather than simply let them go where they have no work.
Today, the Government has released more details about how the scheme will work giving us some of the answers we’ve been waiting for. You can read the full details on the .gov website but for a lighter read we’ve distilled down the most pertinent points and created an FAQ style article.
What is Furlough? – Furlough is a period when an employee is not required to work but maintains employed status. Where an employer is unable to operate or has no work for its employees because of the Coronavirus pandemic, it can furlough its employees instead of laying them off or letting them go. The Government will reimburse the lesser of 80% or £2500 of furloughed employees wage costs backdated to 1st March.
Who should be Furloughed? – Any employee who was on your payroll as of 28th February is eligible. However, only employees who are not working because there is no work for them should be furloughed and there should be a minimum furlough period of three weeks. Here’s how most employees will be categorised during this period and how they should be paid:
- Working as normal – Paid as normal
- Working from home – Paid as normal
- Off sick for any reason – Statutory Sick Pay (SSP). Can be furloughed when sick leave ends
- Self-isolating – SSP
- Shielding – Can be furloughed
- On unpaid leave – Can be furloughed if the leave commenced after 28th February
- Maternity, Paternity, Adoption & Shared Parental Leave – Remains on statutory pay eg SMP. Can be furloughed when due to return to work
- Furlough – Furlough Pay
Do I need to Furlough everyone? – No, you only need to furlough those who you have no work for. If you only have work for a proportion of your staff then you only need to furlough the relevant proportion. Your selection criteria should be fair however and you might want to swap around who is furloughed, but there must be a minimum three week furlough period.
How much is Furlough pay? – Employers should pay and will be able to claim back 80% of employees’ normal salary up to a maximum of £2500. So 80% of £3125 is £2500 which is the maximum you’ll be able to claim back. You can top up pay to 100% but you won’t be able to claim the extra back. Bonuses and commissions are not included in furlough pay?
What’s the process? – Usually you would need a lay-off clause in your contract but under the circumstances you can furlough employees with mutual agreement. On the basis that you would otherwise have to make your staff redundant or let them go we don’t expect that there should be much objection. You should put it in writing and get written confirmation from any furloughed employees. We have a letter template you can download from the Toolkit section of our website which is free for our EmployerGuard clients.
How do I claim back the Furlough pay? – The Government is setting up a portal for employers to make their claims. This should be live over the coming weeks. You should keep accurate records of everyone who is furloughed in order to make your claim. We’re uncertain as yet if you need to make a separate entry on your payroll system but if might not hurt to do this if you have the facility. Information released today says that you’ll also be able to claim back employers National Insurance and minimum auto enrolment pension contributions.
Can employees work during Furlough? – The idea of furlough is to pay people for not working so that they stay at home and reduce the spread of the virus. Therefore they cannot work for you or anyone else during the hours they are contracted to you. If they already had another part time job, they could still do that.
NB. Furloughed workers are allowed to volunteer and undertake training during the furlough period. For businesses in Worcestershire, Bristol and Wiltshire, this is an excellent opportunity to make use of our funded training which we are running via webinar during this period. See the home page for a course schedule
We think we‘ve captured the main points here but we know there will be more detailed and nuanced questions from employers. As usual we’re on hand to support you. Contact us on 01452 331331 or e-mail info@hrchampions.co.uk
