Following our recent employment Q&A webinar we have put together a summary of some of the most frequently asked questions relating to furlough and other issues.
With guidance changing so frequently, we are doing our best to keep you up to date. This information is our understanding at this point of time, however as more and different advice becomes available this position may change and we will update accordingly. This is an evolving and unfolding situation, and we take the view that different measures may need to be applied for different sets of circumstances at an appropriate time. We as a team are available to discuss with you what measures are available to you.
Q: Can employers ask employees to use annual leave while on furlough?
A: The ACAS guidance is that staff shouldn’t be taking annual leave while on furlough. Legislation has been introduced to help with managing annual leave post covid-19 by allowing holidays to be carried over. Where it was “not reasonably practicable” for an employee to take some or all of their leave as a result of the effects of coronavirus employees will be able to carry forward up to 4 weeks of their untaken leave. The carried-over leave must be taken in the 2 subsequent leave years.
When everything returns to normal and employees are looking to take annual leave, companies may receive lots of requests for annual leave at the same time. The normal process for requesting/approving annual leave would still apply. It may not be practicable for employers to authorise every holiday request that comes through and some requests may need to be rejected to ensure adequate staffing levels are maintained.
Q: I had an employee hand his notice in over 2 weeks ago and did so in writing as per our procedure as he got another job and his last day was 27/3/20. He contacted me and stated his new employer is not taking him on and he sent an email stating: He had watched Good morning tv and the treasury stated anyone in his position must contact their previous employer and ask to be put on Furlough leave. As he handed his notice and left on his own accord, do we have to re-employ him?
A: The Government has agreed to change its Coronavirus Job Retention Scheme guidance after a campaign by MoneySavingExpert.com founder Martin Lewis – it’s now clarified that firms can rehire and furlough those who left their job for a new job which then fell through due to Covid 19, but there is no obligation for the employer to do so. However, where the unemployment isn’t caused by coronavirus – for example, someone who voluntarily left a job to take a few months off to travel the world – the rules don’t allow them to be rehired in order to be furloughed. With the Job Retention Scheme in place, there is no cost to businesses apart from the initial 80% salary outlay until this can be claimed back through the HMRC portal.
Q: How do we keep our staff engaged but still on a “voluntary basis” so with no obligation to support us coming back in a better and stronger position together as a team? We have suggested a weekly Zoom catch up to see how everyone is and another time each week to do possible training, brainstorming and webinars to build our knowledge and grow as a team. It has got mixed reactions with some pointing out that it should be voluntary and that they shouldn’t be working. There is a lot of grey area with regards to the Furloughed status and we don’t want to create any problems for the future. Other staff want to come into the business voluntarily and I have said no…..is there any clear guidelines so that their expectations and ours can be met? Our view is that this is an opportunity for us all to brush up on the theory before coming back to practice.
A: It is reasonable to stay in touch with employees while they are on furlough – employers have a duty of care to their employees to ensure their wellbeing. This should be by mutual agreement and should only be used as an opportunity to check in with employees and/or provide essential updates if relevant. Requiring employees to take part in a weekly zoom call for brainstorming would be unfair as employees should not be working. It is reasonable to ask staff to continue with their CPD by doing some training while on furlough, as long as this doesn’t become too frequent.
Q: What constitutes basic pay and what should be included for the purposes of calculating the furlough amount? Should we include overtime if this is paid on a regular basis?
A: This includes wages, past overtime, fees and compulsory/contractual commission payments. Discretionary bonus and commission payments and tips shouldn’t be included when calculating an employee’s furlough pay.
Q: Are we correct in saying that as long as clients only comply with Companies Act 06 then sole director payrolls can claim under furlough? A: The government support applies to all employees so this would include Directors who are also employees. If Directors receive earnings through other means for example Dividends, these are not eligible to be part of the salary calculations.
Q: Can anything be done if they wish to take another job while furloughed but their contact of employment prohibits/discourages this?
A: This really depends on the wording of the employment contract. If employees are on Furlough and take up a second job, this could create problems when it comes time to change the employee’s status and end the furlough period as they may have arranged work and are unavailable to resume working for their main employer. Any employee who is furloughed, and who is looking to take another job, should ensure that they are able to return to their original employer once the furlough period has ended. An employee could ensure that this happens by only working outside their contracted hours (for example in the evening and at weekends).
Q: The vast majority of our candidates work in the construction industry, where there is currently an almost complete ban on work. As such we have furloughed our team. Should we get to the end of the current furlough period and this ban is lifted enabling construction workers to return to work and thus, we resume training their staff. It may take a few weeks (or longer) for construction companies to put training nearer the top of their list. At this point, we may not have a sufficient workload for our team here or cash in the bank to pay salaries. At that point, should there be no further furlough assistance available, what are our options regarding our team if we, at that point, do not have enough work etc for everyone”.
A: Of course, if furlough is unavailable at that point you would have to consider other options. Its not possible to say exactly what support will be available at that time should the situation arise. There may be new schemes introduced or extensions to current schemes. Assuming there are no support mechanisms in place at that time, you may have to consider redundancies or a reduction in working hours but hopefully that won’t be necessary.
Q: Is it correct that the Job Retention Scheme will only cover minimum employer pension contributions (i.e.: 3%), and that anything above that should be met by employer?
A: The Job Retention Scheme covers the minimum automatic enrolment employer pension contributions on the subsidised wage. Therefore, any additional contribution is at the discretion the company and this wouldn’t be covered in by the scheme.
Q: I have heard that there may be a legal challenge launched re the 20% employer contribution, and I understand that the basis is that this would amount to an unauthorised deductions of wages. If this is challenged, what is likelihood of success?
A: All government guidance on the Job Retention Scheme is that employers are only required to pay 80% salary for furloughed employees. Employers should be consulting with employees before furloughing them as this constitutes as a change in terms and so that the employee is well aware that this change to salary will be happening. As long as the employee is consulted with and provided written notice, a successful claim for unauthorised deduction of wages would be unlikely.
Q: I currently have a young apprentice lettings administrator, she started with me on 6th January 2020. As she is on my payroll, does this qualify for me to put her on Furlough? As we are all working from home, I cannot train her therefore she is ideal for Furlough.
A: All PAYE employees are eligible for the Job Retention Scheme so if an apprentice is on the payroll this would include them. One key thing to factor in here is if a Company is already receiving funding for an apprentice’s wage through a third party e.g. a public body, the apprentice may not be eligible for furlough as the Company is already receiving funding. Given that the Company isn’t directly paying for the apprentice’s wage, any attempt to claim for wages could be seen as abusing the system. Employers should check with the training provider and review their agreement for clarity.
Q: Is it likely that policy will change allowing furloughed workers to undertake some work whilst away from the office?
A: This is unlikely. In order to be eligible for furlough, employees are not permitted to carry out work on behalf of the Company. Furlough should not be used to recoup 80% of employees’ salaries and should only be used when there is no work for employees to carry out.
Q: What is the cap on remuneration from the government for furloughed workers?
A: Employers can claim for 80% of furloughed employees’ monthly wage costs, up to £2,500 a month.
Q: Are the NMW rates still increased from 1/4/20 for furloughed workers or is it only based upon the pay rates as at 28/2/20?
A: The new minimum wage rates would apply as normal from 1 April 2020. A full list of the rates can be found here.
Q: When should you tell employees they are on furlough? Do you think we can retrospectively put employees on furlough (as they have not been working for several weeks) with a commitment to cover their full wage in order to get government assistance?
A: Yes, you can furlough an employee retrospectively from 1 March 2020 and this applies to any employee on the payroll on 28 February 2020.
Q: I have a member of staff who has not agreed to be furloughed, has not returned the form I asked them to sign. where do I stand as an employer with regards to paying him?
A: If an employee refuses to be furloughed, as an employer you still need to fulfil your contractual obligations. It would then be up to the employer to look at alternatives and this may include lay off or redundancy if there is no work. Furlough may be the best for both the employee and the employer and all options should be explained to the employee.
Q: The basic salary varied because of different hours. There is talk of average pay on furlough – is it the mean, mode or median?
A: If the employee has been employed for 12 months or more, you can claim the highest of either the:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year
If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.
If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.
Q: Can I put some of my small team x 3 on a part time furlough? I don’t need them full time but do require their input around 3 days per week.
A: Unfortunately, not, it must be all or nothing with furlough. Either employees are working or they aren’t. Companies can assess their operational requirements and select certain individuals to furlough for example in a small team of 3 you may want to furlough 2 employees and leave 1 employee working. Companies can also consider a temporary reduction in hours – Its important to note that this would require consultation as this is a change to an employee’s terms and then the employee should be issued the changes to terms in writing.
Q: I understand the HMRC Portal will be live towards the end of April is that your understanding?
A: Yes, the portal that employers will use to claim is still in production but is expected to be ready by the end of April 2020.
We’ll be hosting another employment Q&A webinar via Zoom on Thursday 16th April 2020 which will be a good opportunity to find out the latest guidance and see what has changed since the last webinar.
The webinar will be hosted by Marianne McJannett, Employment Lawyer with TC Young and Neil Ferguson – Head of Client Services (Glasgow) at Gravitate HR. Attendees can submit questions ahead of the webinar and will also have the opportunity to ask questions live. More information on this webinar and how to register to follow!