Coronavirus Job Retention Scheme aka Furlough

We are still awaiting the final details of this scheme although comprehensive guidance has now been published. So this comes with a caveat, but here is what I know and I hope you will find it helpful.  Apparently the aim is to get the scheme up and running by the end of April so you may need to ask your bank nicely for help in the interim period.

1. I want first to remind you that redundancy is about jobs and not people and that redundancy is about jobs you no longer need/require.   That is clearly not the case at the moment for most organisations – once this is all over and something akin to normality returns, you will need those job roles again so you cannot consider that simply not needing folk for the next 3-6 weeks is a redundancy situation.  For example, if you have a retail outlet that has been forced to close you will need those staff once your store is able to open again.
2. This scheme has been set up to prevent redundancies.    It, therefore, follows that in any ET claim for unfair selection for redundancy, the Tribunal will consider whether furlough was an option and if it was an option, then the redundancy might be considered to be unfair.

However, I add to that statement that an employee with less than 2 years continuous service cannot claim unfair dismissal or unfair selection for redundancy unless it is on the basis of discrimination or health & safety.  It does, therefore, follow that, if you are intent on making redundancies, choosing employees with less than 2 years service is the safest option.

Also, please do not choose anyone who is self-isolating without the Public Health England advice to do so as their ET claim may focus on health & safety and on that basis they do not need 2 years service.  Dismissal on the grounds of health & safety is automatically unfair.

3. Please note that this scheme applies to employees on your PAYE system prior to 29^th February 2020 and not to workers.

Employees taken on after 1st March are excluded from the scheme.

It does apply to Fixed Term employees because, as you know, the Fixed Term Employees (Prevention of Less Favourable Treatment) Regulations 2002 prevents you from disadvantaging fixed-term employees.

4. You cannot impose furlough.  It must be by consent.  This is because it represents a deduction in wages and your failure to fulfil your obligations under the contract to provide work.

I think most employees will take what is on offer and in particular if the option is redundancy.

5. Furlough is for a minimum of 3 weeks so you can’t set up a weekly rota of folk on and off furlough. But you might want to consider staggering sending employees on furlough so you eventually have a staggered return to work.
6. The government – through HMRC – will pay 80% of each employee’s wages up to a maximum of £2,500 a month.  Minimum auto-enrolment pension costs and employers NI will be paid in addition to the 80%.   You could choose to make up the other 20% but if your employee agrees to take the 80% you are not obliged to make up the difference.

The money will be paid to you the employer and not direct to employees.

The 80% salary that your employee receives will be subject to the usual statutory deductions.

7. The 80% is based on the higher of (i) the earnings in the same pay period in the previous year, or (ii) the average earnings in the previous 12 months (or less if they’ve worked for less).

HMRC will, of course, have these figures to cross-check for fraudulent applications so don’t be tempted to suddenly employee members of your family in order to access the 80%!!

8. The contract of employment between you and your employee remains in place – just as with maternity leave.  So, annual leave continues to accrue and any benefits such as private healthcare, vehicles etc. must remain in place.
9. The employee must not be working at all. If they work for even an hour they are not eligible.  However, they are able to undertake training and do volunteer work provided they do not provide services to or make any money for their employer.
10. If you decide to ask some of your employees to take a furlough and not others you will need an audit trail to show how you decided which to retain on full pay and which to ask to take a furlough.

Take great care not to stray into any areas of discrimination when you put together your selection criteria.  To choose on the basis of age, for example, might be discriminatory.

Also, don’t forget the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 so don’t just choose part-time staff.

Do contact me for help with the selection criteria if you need help or just want to check that your matrix is appropriate.

11. Can employees take annual leave whilst on furlough?  Yes, subject to the usual notice being given.

But you will probably be obliged to pay 100% of wages during annual leave unless new Regulations say otherwise – Regulations coming in the next 1-2 weeks.  This is because there is case law around what employees are paid during annual leave – any reduction in wages during annual leave was thought to act as a deterrent to folk taking their annual leave.

So, if the employee is on furlough and takes annual leave you will need to make up the 20%.  Of course, as normal, you will be able to refuse annual leave.   The flip-side of that is when normality returns you may have an entire workforce wanting to take annual leave at the same time!

12.  What if someone is ill during the furlough?  What the individual is paid will be down to the ‘effective cause of absence’.   So, if the employee is ill, then they will get SSP in the same way as if they had been at work as their absence is due to ill health.

Redundancies:  If you going to make folk redundant, please do not forget the statutory process.  You must consult, you will need to pay notice pay plus redundancy payments.  Given that this is all about preventing redundancies, the likelihood of you recouping any redundancy payment from government is zippo!

If you have made employees redundant since 1st March you can re-employ them and then furlough them.

I hope I have covered everything as far as I am able at the moment.  If you have questions please contact me, I may not know the answer but I will do my best to find out for you.