THE HR IMPLICATIONS
In a constantly evolving world, responding at pace to the global COVID-19 pandemic, one thing is certain – nothing is certain. Despite a global pandemic having long been identified as the number one security risk to the UK…we were still not sufficiently ready for it.
It is therefore not surprising that the measures introduced to assist the public, employers and employees, through the crisis, have not been sufficiently thought through. This is not a criticism, but it is a fact. Whereas previously introduced legislation could be relied on, almost immediately, current measures are being introduced, adapted and sometimes changed on an almost daily basis.
furlough – [noun] – leave of absence, especially that granted to a member of the services or a missionary
As can be seen from the above ‘definition’, it is not surprising that many people had never come across the term before. So, when the Chancellor, announced the Coronavirus Job Retention Scheme on 23 March 2010, and the fact that employees would need to discuss with workers the need to classify them as ‘furloughed workers’, many were unsurprisingly confused.
The purpose of the ‘Scheme’ is to allow employers to receive a grant from the Government of up to 80% of their employees wages, up to a maximum of £2,500 per employee, per month, for an initial period of 3 months. So for employees on a salary of up to £37,500 pa, 80% of their normal pay would equal £2,500 or less. For those on wages above £37,500 the potential reduction in their normal earnings is greater.
Whilst business can top up an employee’s wages to 100%, they are not obliged to. The ‘Scheme’ is designed to protect jobs. Rather than making employees redundant, they can remain on payroll, with the Government funding the majority of the employment costs. When businesses are unable to raise any income, this may be vital to their survival, as long as those that are able to continue to operate their businesses do not try to take advantage of the scheme by reducing the wages of employees who are working normally.
- can be encouraged to undertake training;
- must be furloughed for periods of at least three weeks;
- cannot undertake and work when on furlough;
- can be rotated through periods of furlough and work. So, for example, some staff could work for three weeks whilst others are furloughed, and then each group could theoretically swap.
THE LATEST POSITION – AS AT 10 APRIL 2020 -HMRC announced on 8 April 2020 that the online portal being built to process the payments of furloughed staff will be open from Monday 20 April and HMRC will be ready to make payments by Thursday 30 April.
THE LATEST POSITION – AS AT 15 APRIL 2020
- The Scheme applies to any employee who is furloughed “by reason of circumstances as a result of coronavirus or coronavirus disease”
- To claim furlough, the employer and employee must have agreed in writing that the employee will cease all work.
- The grant paid – i.e. the 80% – will only be related to the employee’s salary excluding anything which is not “regular salary or wages”.
- The employer cannot claim for any salary which is “conditional on any matter”. So if the employer has told their employee that they will only pay them £x, on the basis that the Government eventually pays them the grant under the Scheme, then this would be likely to be void, as it is ‘conditional’.
When a large proportion of the working population are either working from home, or at home because they have been furloughed, and any holiday plans that they might have had six weeks ago have been decimated by the current situation, it might seem odd that ‘holidays’ has been one of the issues that has caused so much discussion. But it has.
Previously, holiday accrued whilst somebody was at work. Holiday, from a health and safety angle was important in that it gave a worker time to recuperate. To have a period of rest and relaxation, in order to remain ‘healthy’. When someone is on furlough, they should not be required to work. If they are not required to work, the question has been asked as to whether they should accrue holiday whilst they are on furlough.
THE LATEST POSITION – AS AT 10 APRIL 2020 – Despite there being no official guidance from HMRC – the current position is that furloughed employees can take holiday. Why is this important, given that they’re not able to leave their house (other than for limited reasons)? The main issue is pay. Employees should probably receive ‘normal’ pay for any period of holiday. That is, 100% of their pay, rather than the 80% that the majority will receive if furloughed under the Government’s Coronavirus Job Retention Scheme.
One of the features of the Coronavirus Job Retention Scheme is the effective, or key payroll date. To be eligible for the Government’s grants under the Scheme, employees must be designated as a furloughed worker and have been on the company’s payroll as at 28 February 2020. So what about employees who left one employer after the 28 February 2020, and either starting with another employer after that date? This would include employees who resigned so that they could further their career elsewhere; or employees who were dismissed for misconduct or possibly as a result of redundancy. Without any further action, these individuals would not be able to benefit from the grant that any new employer could claim on their behalf. If, for example, the individual started working for a new employer on 30 March 2020, even if they were subsequently ‘furloughed’ by the new employer, the new employer would be unable to claim any money under the Government’s Coronavirus Job Reduction Scheme, which they would otherwise have been able to pass on to the employee. Any money that the new employer paid to their new employee – if furloughed – would have to come from their own resources.
However, the Government made it clear that former employers could ‘take their old employees back’ and then claim the 80% of their previous salary for them under the scheme. Such action is not without risk, because in doing so, they would be re-establishing continuity of service. So if an employee had left the company shortly before they had had two years’ service, by taking them back so that they could benefit from 80% of their previous pay for 3 months, might give them more than two years service and all the employment rights that go with that. So, it is best to take advice, and ensure that a furlough agreement is entered into.
THE LATEST POSITION AS AT 15 APRIL 2020
- Employees who were employed on 19 March 2020 (previously 28 February 2020) are eligible for furlough, provided the employer had submitted real time information payroll data by that date.