Hundreds of thousands of people in the UK continue to be put ‘on furlough’ since the outbreak of the Coronavirus. ‘Furlough’ is the term used for when a business’ employees have to take time off work temporarily – the condition of the economy has a big role to play in the decision to furlough employees (As you can imagine, the Coronavirus is not doing the economy many favours right now). The virus has caused businesses to temporarily close, and this has led companies to make some difficult but necessary decisions on whether to make certain job roles redundant or whether to furlough workers. The Governments Job Retention Scheme makes some of these job protection decisions easier and is being used sensibly to combat the tough economic climate during the pandemic.
As a recap, The Job Retention Scheme allows for businesses, that cannot operate during the Coronavirus outbreak, to put employees on furlough and still be able to pay up to 80% of their wages through the scheme, with a cap of £2,500 per month. This is a temporary scheme which started on 1st March and will be in use for the next 3 months. The length of the Job Retention Scheme may be extended, if required.
There has now been some additional guidance given regarding the scheme, and we wanted to keep you updated.
Who is eligible?
Previously, it wasn’t clear who was actually eligible for the scheme. There were questions around apprentices and zero-hour contracted workers but it was confirmed on April 4th that these types of workers are protected by the Job Retention Scheme, along with contracted workers.
Those who have caring responsibilities as a result of the Coronavirus are also protected by this scheme and can be furloughed – like parents who might need time off to care for children due to health reasons, or even due to school closures.
Company Directors can also be protected by the Job Retention Scheme. The additional guidance given on April 4th also set in stone that Office Holders and members of LLP’s, who are paid through the PAYE system, will be entitled to the scheme covering up to 80% of their salary.
The Job Retention Scheme goes one step further and protects those who might be employing workers as an individual. For example, a nanny or a carer. If these workers meet the other eligibility criteria, they can also be furloughed, and the individual employer can apply to have their wages provided to them through the Job Retention Scheme.
Employees who left a business on or after February 28th, whether they left due to redundancy or their own reasons, can be re-employed and businesses can furlough these employees under the Job Retention Scheme too. Workers who fall in to this category can reach out to their previous employers and can request to be placed on furlough with their business, and receive up to 80% of their wage states the latest guidance.
Can employees get employment elsewhere if their business is in furlough?
It is common for people to have more than one job in the UK – so what if an employee is furloughed by one employer but not another? It has been confirmed that people can continue to work for other businesses if their place of work has been furloughed. The employee would receive their furloughed wage of up to 80%, along with their full pay from their second place of employment. Although the Job Retention Scheme doesn’t cause any conflicts between places of employment, there may be parts of the contract of employment which stops workers from getting a second job whilst placed on furlough.
How is the furlough payment calculated?
As previously mentioned, to be furloughed is the term used to describe a workers’ employment status whilst temporarily out of work, protected by the Job Retention Scheme. However, the further guidance given on April 4th 2020 explains that when referring to salary, the government will not be covering any non-monetary benefit costs like pension schemes. The biggest change based on the most recent guidance, is that it has been clarified that workers who earn commission will be protected by this scheme too as workers can now “apply for regular payments you are obliged to pay your employees”.
Employer procedures during furlough
It is important that employers are taking the right steps when putting their employees on furlough. This must be communicated effectively with the employee. It may be difficult to keep employees’ morale high during this time but ensuring that workers are clear about the situation and the reason behind furlough will more than likely make the process much easier, and will keep employees feeling relaxed. It has also been stated by the government that all relevant contracts of employment must be updated, and records regarding furlough kept. Employers have been asked to keep records of employees who are on furlough for 5 years.
Although the additional guidance on April 4th has answered a lot of questions, there are still a few parts of this scheme which seem unclear to workers and so we will continue to provide updates as an when available.