Updated 25 August 13:00
The Government are presently making up policy day by day to help firms avoid having to layoff or make employees redundant, and now to get people back to work. As a result, there are many ambiguities and issues with its schemes. The following represents our best interpretation. We will continue to update this blog as more information becomes available.
Do my staff accrue holiday whilst on furlough?
Yes, employees will continue to accrue their contractual notice even if they are furloughed. They can take holiday whilst on furlough, but they will need to be paid at their normal rate of pay, or an average of the last 52 weeks if they work variable hours. Indeed, you should be enouraging people to take their holiday whilst on furlough.
Can I force people to take leave?
Yes, you can require them to take holiday whilst on furlough. You should give the person twice as much advanced notice as the amount of leave you want them to take. For example, if you would like the person to take 5 days holiday, you give them 10 working days' notice. You should remember that the holiday leave is to allow the person to enjoy leisure time, so if the person has to self-isolate or socially distance they are unlikely to be able to make effective use of their holiday.
I can't allow all staff to use their accrued holiday by the end of the holiday year. What do I do?
Staff should be encouraged to take their holiday within the holiday year. However, it's not possible for some businesses to allow all staff to take their holiday allowance in the remaining portion of the holiday year. The government has developed a new set of regulations: The Working Time (Coronavirus) (Amendment) Regulations 2020. The new regulations allow holiday to be carried forward where 'the impact of coronavirus means that it has not been reasonably practical to take it in the leave year to which it relates.' The holiday can be carried forward into the following two leave years.
Can I still put new people on the furlough scheme?
From 30th June you can only furlough people who have already been furloughed by you for at least three weeks. This means that if you plan to put new people onto the furlough scheme you must to do this on or before 10th June to ensure that they have been furloughed for three weeks.
Can I now bring people back to work part time and still claim furlough payments?
From 1st July, you will be able to bring employees back on a part time basis and you will be able to claim under the retention scheme for the hours that they remain furloughed.
When do I start contributing more to furloughed employees pay?
In June and July, the Government will still pay 80% of the employee’s salary up to a cap of £2,500. In August the Government will pay 80% of the salary (capped at £2,500) but the employer will pay the Employer’s NI and pension contributions for their employees on furlough. In September, the government will pay 70% of salary (capped at £2,187.50) with the employer paying 10% to reach the 80% salary cap. The employer will also pay ER NI and pension contribution. In October, the government will pay 60% (capped at £1,875). The employer will pay 20% of the salary to reach the £2,500 cap and ER NI and pension contributions. The furlough scheme ends after the October grant payments.
What do I do if an employee refused to return to work after I furloughed them?
It’s understandable that some employees will be concerned about returning to work after being furloughed. You should listen to their concerns and address each in turn. They will need reassurance that the coronavirus-safe processes and procedures that you put in place are adequate and that they will control the risk of anyone contracting Covid-19.
If the employee has a valid reason for believing that their health and safety is threatened, then you should consider keeping them on the furlough scheme. Employees falling into this category include those who have a GP’s letter advising them to ‘shield’; employees with NHS sicknotes, or those who have child care issues due to schools remaining closed.
If, after full investigation, you believe that the employee should be taken off furlough then you will need to explain this to them. Share the facts with them and explain that if they do not return to work, their absence will be unauthorised, and therefore unpaid. Unauthorised absence is likely to fall under the disciplinary procedures in place and may therefore lead to that procedure being invoked. Another option would be to allow the employee to use their outstanding holiday to cover time that they refuse to work.
The key thing is to remember that you must take reasonable steps to protect the health and safety of all your employees. If you follow Government guidelines, and put all reasonable precautions in place following a coronavirus risk assessment, then employees should be able to return to work – perhaps reluctantly, but in the knowledge that you have taken all reasonable steps, and addressed all their concerns. You will, of course, keep a note of all discussions (formal or informal) with employees.
We recommend that you continually review all cases where employees do not return when asked.
Do I have to pay employees who self-isolate?
Your company sick-pay scheme or SSP will be invoked if an employee is absent due to sickness. The Government stated that SSP would be paid if an employee needs to be off because they, or their family have symptoms. Sick notes can be obtained from NHS111 (111.nhs.uk/covid-19). Eligible employees will receive sick pay from day 1 of their sickness. Companies with less than 250 employees can claim back two weeks of SSP paid to those absent due to coronavirus.
Employees who are on sick-leave or those self-isolating will get SSP (subject to eligibility). After this they can be furloughed.
Employees who are shielding, subject to public health guidance, can be placed on furlough.
How do I claim back coronavirus related sick pay?
To be eligible for the scheme you must have employed 250 or less on 28th February 2020. A rebate can be claimed for any employee who was off work due to Covid-19 symptoms on, of after, 13th March 2020. You can also claim a rebate for anyone ‘shielding’, as a result of government guidance, on or after 16th April 2020.
Anyone who has been placed on furlough is not eligible to be included for a rebate. But, if you take them off furlough and they become sick, you can make a claim for the rebate. The rebate scheme covers a maximum of two weeks SSP payments.
As with furlough, there is a government portal where the relevant data must be entered. The portal will be operational from 26th May. The government website will guide you in how to claim back SSP.
Do I need to have a doctor’s fit note to be able to claim the SSP rebate?
No. You can however ask for an isolation note from NHS 111 (England), NHS inform (Scotland) or NHS Direct (Wales). Alternatively, you can ask for an NHS or GP letter advising the employee to stay at home for at least 12 weeks due to their risk of severe illness due to coronavirus.
I don’t have enough work for all my employees, what are my options?
You have several options:
- You can ask people to use holiday over the period where your work load is reduced. They will be paid as normal.
- You can lay people off. If you do this without a clause in the employment contract you will be in breach of contract unless you pay full pay, so take care if you choose this option. A lay off is classed as being off work for at least one normal working day. There is no limit to how long a person can be laid off. However, if someone is laid off for 4 weeks, or 6 weeks in a 13-week period in a row they can apply for redundancy and claim redundancy payment. If you lay people off without pay they are entitled to statutory lay-off pay, subject to eligibility.
- You can invoke short-time working. This is where you cut the hours someone works. Short-time working follows the same rules as layoff.
- You can make people redundant. You must still follow a fair process if you need to invoke redundancy. Check out our redundancy white paper and other resources.
- You can invoke the government Job Retention Scheme which has been specially introduced due to the coronavirus outbreak. This is discussed in more detail below.
What is the Job Retention Scheme?
If you believe that you need to lay off, or make employees redundant due to the coronavirus outbreak, the Government will cover 80% of an employee’s salary, subject to eligibility.
The payment is capped at £2,500 per employee per month. This figure will be gross, and hence taxable. The payment is only eligible to employees who are paid via PAYE.
To be eligible to claim under the job retention scheme you must continue to employ the people. You can top up the employee’s pay to 100% by paying the remaining 20%.
The 80% contribution covers basic salary, employer NI contributions and minimum automatic enrolment employer pension contributions. Other sums that you are obligated to pay such as backdated overtime, fees and compulsory commission than also be claimed. Bonus, discretionary payment and non-compulsory commission payments are not included in the contribution.
The online service to make a claim to cover wages went live on 20th April. The scheme is for all UK employers, provided that they have created, or started a PAYE payroll scheme on or before 19th March 2020. The first payments will be made on 30th April 2020.
Which employees can I furlough?
Any employee you furlough must have been on your payroll on, or before, 19th March 2020. This includes:
- full time employees
- part time employees
- employees on flexible contracts
- employees on zero hours contracts
- employees on agency contracts.
Only employees who were on payroll before 19th March, and notified to HMRC on an RTI submission before 19th March are eligible for a furlough payment.
You must write to the employee explaining that you have agreed with them that they will be furloughed. A copy of this communication must be kept for five years.
I’ve already laid people off, what should I do?
Provided that anyone who has been laid off is “brought back into the workforce” they can then be covered by the scheme, subject to eligibility.
If you made employees redundant after 28 February 2020 they can be rehired and furloughed instead. Since they are no longer redundancy they will not be eligible for redundancy pay.
How does the Job Retention Scheme work?
If you have no work for people then you can designate them as “furloughed workers” (provided they were on your PAYE payroll on 28 February). They remain an employee, but you have no work for them. Unless you have a clause in the terms and conditions of employment allowing you to make change to the contract this action, will form a breach of contract. So, you need to discuss with affected employees your proposed course of action.
Once you have agreement, then you change the employee’s status to “furloughed worker”. You will need to notify each employee regarding their new status.
Can I use the furlough scheme where I ask employees to reduce their hours?
Based on the current information, if an employee is furloughed they are not allowed to work. So, the scheme (as it stands currently) does not cater for those employees that are put on reduced hours. This will change from 1st July 2020.
You must furlough someone for a minimum period of three weeks (backdated to 1st March if applicable). There doesn't appear to be anything to stop you from bringing someone back for a period and then re-furlouging them.
Business organisations, such as Federation of Small Businesses, are lobbying government to help firms where some people are working on reduced hours to keep the business going.
How do I claim the grant under the Job Retention Scheme?
The rules and regulations for claiming the grant are quite complex. The guidance page on claiming will help you determine if you are eligible, and how much you can claim to help cover wages of those employees that you furlough. The portal is now open. The scheme will run until the end of October.
The Government has now imposed a lock down, what do I do?
If you are not a business that is allowed to stay open, you will need to close. If you have people who can work from home, they will do their job from there. If you need to lay people off due to the lock down, then you need to speak to them and explain the situation. Instead of lay off, you could designate employees as furloughed workers (subject to eligibility). You must then decide if you will continue to pay them their full salary, or at 80% which you can then claim back from the Government.
Can I make employees redundant during the pandemic?
The essence of redundancy is that there is a reduction in work of a particular kind for an employee to do. That is often the case during this coronavirus emergency and the Government has implemented schemes to try to encourage employers to avoid redundancy. Nonetheless, it may be that redundancy is inevitable.
Under redundancy, an employee's job may be judged no longer required and hence the job is redundant. If only one person does that job, the jobholder will then be dismissed by reason of redundancy. If more than one jobholder does the job, there will need to be a selection process to decide which jobholders are dismissed. A fair and robust process must still be followed, even during the coronavirus crisis.
There is much on our website about redundancy. Start by reading Redundancy: Questions employees will ask.
The options available to me are very confusing. How do I make decisions?
If you value your firm and your employees and want to start up again once the emergency is over, continue to pay your employees as normal. Register them as furloughed, and claim their wages back.
If you do want to re-start, but don’t have the cash to pay wages until the furlough scheme pays you, you may be able to take out a Government-backed loan to tide you over. Contact the Government on this or talk to representative bodies like the FSB.
It may not be all or nothing. Do consider having key employees continue work while you furlough others. Take care here because there are many equality discrimination issues lurking in your decision.
If, despite the help that the Government promises to give, you feel you must make employees redundant, check our various web pages on how this must be done, or call us.
I have employees that will transfer under TUPE. What do I do?
The government have confirmed that employees who transfer under TUPE after 19th March can be furloughed and the new employer can make a claim under the Job Retention Scheme.
Can my employee do some work for me whilst on furlough?
The simple answer is no. They will not be able to undertake any work that will provide services or make money for you, or any linked or association organisation. Employees can undertake voluntary work and they can undertake training. If the employee is undertaking training (likely to be online learning) they should be paid for the time they train as this will be counted as work.
Various employment bodies (including CIPD, FSB and CBI) are lobbying the government to help employers who need to keep people working , but on reduced hours. As soon as there is any further information we’ll update here.
Can my employee has taken on a job with another firm whilst on furlough.
Your terms and conditions of employment will specify whether an employee is allowed to have a second job, and if so, under what circumstances. You should refer to this document. However, you may decide to allow employees to take on other work that doesn’t have a detrimental effect to, or conflict of interest with, your business. You will need to explain to them that as soon as you are able to bring them back to work they must be available. If you do agree to other work being undertaken you should log this and note the conversation you had with your employee.