Furloughing employees: Further clarity from the Government
The Government has now released formal Guidance for employers who are considering furloughing employees. The full Guidance is available here.
The latest Guidance can be summarised as follows:
- Furloughed employees must have been on the employer’s payroll on 28 February 2020. The scheme applies to full-time employees, part-time employees, employees on agency contracts and employees on flexible or zero-hour contracts.
- The scheme is open to all UK employers who had a PAYE scheme in place on 28 February 2020. Any organisation with employees can apply, including charities, recruitment agencies and public authorities. In relation to agency employees, the scheme is only available for agency employees who are not working.
- Anyone who was on the payroll on 28 February 2020 but has since been made redundant can be rehired and then furloughed.
- Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus the associated employer National Insurance Contribution and minimum auto-enrolment pension contributions on that wage. Fees, commissions and bonuses are not included.
- An employer can choose to top up to 100%, but does not have to.
- For employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (i.e. earnings from March 2019) or (ii) average monthly earnings in the 2019-20 tax year.
- Individuals are only entitled to the minimum wage 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 (NMW or NLW) based on their normal working hours, they still only receive 80% as they are not working.
- Furlough leave must be taken in minimum blocks of three weeks.
- The employee must not be working at all. 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.
- Employees receiving sick pay, or self-isolating, cannot be furloughed. Employees who are ‘shielding’ in line with public health guidelines can be placed on furlough.
- Employees on maternity leave can continue to claim Statutory Maternity Pay.
- Employers can only claim once every three weeks – the minimum block of time for which an employee can be furloughed. Claims can be backdated to 1 March 2020.
Whilst the Guidance provides some clarity for employers there are still a number of issues that have not been addressed. We are on hand to help employers interpret the Guidance and implement plans to furlough workers.
Look out for our more detailed commentary on the Government’s Guidance which will be coming out to you shortly.
If you have any questions, please email or call our Employment Law team today on 0113 207 0000.
Partner and Head of Employment
Employment Law
PKelly@LawBlacks.com
0113 227 9249
@PaulLawBlacks
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Paul Kelly
