|Yesterday evening the Government published further guidance on the Coronavirus Job Retention Scheme, answering some questions on how furlough leave will operate. The key points can be summarised as follows:-
1. Any organisation with employees can apply, including charities, recruitment agencies and public authorities. However, the Government does not expect public sector employers to use the scheme 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.
2. What’s included in the £2,500 cap? It covers “usual monthly wage costs”. Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus associated employer National Insurance Contributions and minimum auto enrolment pension contributions on top. Fees, commission and bonus are not included.
3. For those with variable monthly salaries, there is a choice of calculation: (i) earnings in the same period in 2019; (ii) average over the last 12 months (or monthly average for a shorter period if the employee has not been in a job for the whole year).
4. Who does the scheme apply to? Anyone on the PAYE payroll as at 28 February 2020. That includes zero hour contract workers and agency workers if on PAYE. It includes anyone on the payroll at 28 February 2020, including those made redundant after that date and then re-hired. If they were hired later than 28 February 2020, they are not included.
5. Can you rotate multiple employees in and out of furlough leave? Sort of. Furlough leave must be taken in minimum blocks of 3 weeks. So you cannot just chop and change employees week by week. This may cause issues, for example, in production lines where COVID-19 hits the retained critical non-furloughed employees. The employer may be forced to order someone back to work in circumstances where that order deprives them of furlough payments. However, there is nothing to prevent employers from rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks. Short-time working is also not covered under the scheme (which we knew already).
6. An employer can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements).
7. Workers are only entitled to the national minimum wage (NMW) 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, workers are entitled to NMW for training time.
8. Can an employee work whilst on furlough leave? No, at least not for that employer. It is implied that they can work elsewhere though (indeed an employee can be furloughed in each of his/her jobs). However, it they volunteer or undertake training for the claiming employer, that will render them ineligible if that generates revenue for the employer or is the provision of a service to the employer. There is no explanation of what that means.
9. When agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law principles apply. The employer must be careful not to discriminate in deciding who to offer furlough leave to. Prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s (direct age discrimination against those under 70) may be justifiable, and those who do not suffer from serious underlying health conditions are not a protected class. Consideration should also be given to whether prioritising vulnerable disabled employees for furlough leave may be a reasonable adjustment.
10. Employees on sick leave or self-isolating cannot be furloughed. However, they can be furloughed after the period of illness/isolation ends. If on maternity leave (or similar), the employee can continue to receive Statutory Maternity Pay (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.
11. Employers can only claim once every three weeks. So they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
12. Are employers required to pay salary first before claiming? Seemingly not. The guidance requires all the amount received to be paid to the employees and allows for a claim on an imminent payroll. The previous guidance referred to “reimbursement” but this guidance does not. If this is right, it will be a relief to some employers.
We understand that the Government will issue in due course further guidance on how to claim the payments under the scheme. The guidance also states that the scheme should be up and running by the end of April.
Please carefully read the full guidance at the link below: –