24 March 2020
Q&A by The HRdept - 80% Furlough recovery
Courtesy of HRDept Website
Apologies for a second email this week - but as promised, we've been collecting your questions and have some initial responses for you:
What does furlough mean?
Furlough is not a legal term in the UK, but it means temporary leave. We think that the Chancellor was referring to those employees who have been (or will be) laid off temporarily or have been dismissed for reason of redundancy.
Is every business eligible?
Yes. It applies to all businesses who employ staff through PAYE.
How much can I claim?
The guidance states a maximum of £2500 per furloughed employee. 80% of furloughed workers wage costs. We do not yet know if the maximum wage can be £2500 and workers receive 80% of that or the 80% is £2500. It says it covers all employment costs so we imagine that includes pension and employers national insurance contributions.
How do I claim?
Submit information to HMRC and individuals earnings via an online portal (which has not yet been set up).
How long is the scheme for?
Three months but could be extended depending upon the circumstances.
When do I get the money and can I keep it? The Chancellor said the scheme would be paying out from end April?
We do not have the details yet on payment mechanisms but of course you will be expected to pass the money on to employees. Until the money is received there is no obligation on you to pay the 80% for furloughed employees.. Or the 20% although you could if you wish. If you do pay the 80% make sure the letter is clear that you then keep the money from the Govt for that period.
Can I designate any employee as furloughed?
Yes
How do I designate an employee as furloughed?
This depends on whether or not the employee has a lay-off clause within their employment contract. If there is a lay-off clause then the employer can make the decision to furlough or lay-off an employee.
What if there is no lay off clause in the contract?
If there is no lay-off clause n the employment contract then the employer will have to agree with the employee to be furloughed. If the employee does not agree then the options are:
- Make the employee redundant (most employees will not want to lose their job at the moment)
- Send home but employee will be entitled to full pay (most businesses will not be in a financial position to do this)
Can an employee refuse?
Please contact us to discuss further if your employee does not agree to be furloughed. We are working with our legal advisors on a template letter in late of the latest announcements (23rd March 2020).
What about zero hours?
We await guidance but our working assumption is they will be included (given this was negotiated with Labour and the TUC)
Can I move self employed onto payroll now so they can get it?
No. It is expected that HMRC will be looking for evidence of employment and of income tax and National Insurance contributions going through your PAYE payments. At present we are not aware of the exact terms of the Scheme, but it is unlikely that you will be able to offer those sub-contractors the opportunity to become employees.
Can an employee request?
Yes, although no process for that, but they are free to ask. The employer has to agree so only furlough an employee if this is appropriate for the business.
Can an employee insist?
No. The employer has to agree so only furlough an employee if this is appropriate for the business.
Do I have to pay the extra 20%?
The employers guide on this point does not answer this question but the employees guide says that the employer does not have to. At the same time though, the guidance states that this scheme does not intend to amend the employment contract which means that if there is no contractual right to lay off, then you may have to top up to 100%. We will wait for further guidance before confirming. If there is a lay off clause in the contract, then you will not have to top up to 100%.
Can I pay less than 20%?
The guidance does say you can - top up to 100% - so we assume so.
Can I still use the employee in my business?
No. The guidance is clear that employees must not do any work for their employer whilst furloughed.
Who calculates the 80%?
We believe the HMRC portal will assist with this (once we know what is included, NI and PAYE for example)
How many weeks is it averaged over?
We do not know yet. The law changes from 6th April to 52 weeks rather than the existing 12 so it could well be that
Does it include overtime/regular additional hours?
We will need to see the guidance
Can I claim it for myself?
You would have to furlough yourself, ie do no work in or on the business whilst furloughed
How long does an employee have to be furloughed for? We do not know yet if it just be a day or is there a minimum period of time?
The guidance is not clear, we will update you as soon as we know more.
Can we furlough working parents who need to be at home?
We imagine that this will depend on whether you would need them at work if they did not have to be at home. If they could source alternative childcare, would you need them back at work? If so, then we do not imagine they would be eligible for furlough because the Scheme applies to workers who you would ordinarily lay off. If not, then furlough would apply. However, we do not know if that is possible because such guidance has not yet been released.
What about redundancies we have already made?
If we have made redundancies already, can we reinstate the employee and bring them back to take advantage of the scheme? If so, how do we do this and what if the employee says no?
We know that this scheme will be backdated to 1st March 2020 which we imagine is for employees who are temporarily laid off at the moment but there is no guidance on what to do or whether it applies if you have already made someone redundant. We will update you as soon as we know more.
Can they work or volunteer elsewhere?
Maybe. If the exiting contract allows employees to undertake other work whilst employed by you, then provided those employees follow Government guidance on social distancing and self-isolation, as well as adhering to any updated or subsequent guidance on a full lock-down, then it would be possible for them to undertake other voluntary or paid work. At present, there will be a considerable requirement for volunteers across the entire country and it would be good for all employers to let their staff make their positive contribution for this crisis.
Can I furlough instead of paying SSP?
No. If they are off sick you should pay statutory sick pay and that can be reclaimed by the Government. If their contract allows for company sick pay, that is your responsibility and is not eligible for reimbursement under the Job Retention Scheme. If one of your furloughed employees becomes unwell, then we assume that the normal rules in relation to incapacity for work will apply. It is much easier now to get an isolation note from NHS 111, which confirms that you are required to self-isolate. If an employee provides you with that isolation note, then they should move onto SSP, which is payable from day 1. Having said that, if an employee is receiving 80% of their salary and does not require to attend work, then it is unlikely that they will advise you of the requirement to self-isolate
Can I furlough those who need to self isolate?
No, this means that they will be off sick for the purposes of statutory sick pay, unless the guidance tells us otherwise as more information is released.
What is the latest on SSP?
You can get £94.25 per week Statutory Sick Pay (SSP) if you are too ill to work. It is paid by your employer for up to 28 weeks. If an employee is self-isolating because of COVID-19:
From 13 March, they can now claim SSP. This includes individuals who are caring for people self-isolating in the same household and therefore have been advised to do a household quarantine.
When does SSP apply?
The government is legislating for SSP to be paid from day 1, rather than day 4, of an individuals absence from work due to sickness or need to self-isolate caused by COVID-19. Once the legislation has been passed, this will apply retrospectively from 13 March.
Do individuals need a sick note?
From Friday 20 March onwards, those who have COVID19 or are advised to self-isolate will be able to obtain an isolation note by visiting NHS 111 online and completing an online form, rather than visiting a doctor. For COVID-19 cases this replaces the usual need to provide a fit note after seven days of sickness absence.
What if I am self-employed or not eligible for SSP?
If you are not eligible for SSP for example if you are self-employed or earning below the Lower Earnings Limit of £118 per week and you have COVID-19 or are advised to self-isolate, you can now more easily make a claim for Universal Credit (UC) or new style Employment and Support Allowance. For more information on how to claim, please visit https://www.gov.uk/universal-credit and https://www.gov.uk/guidance/new-style-employment-a...
Next steps:
- Select your employee for Furlough
- Obtain written consent to 80% pay (we can provide a template letter)
- Send the employee home
- Register for the Furlough Pay using the online registration portal (when it goes live)
List of Businesses to close following Ministerial Order 23rd March 2020 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874732/230320_-_Revised_guidance_note_-_finalVF.pdf
If you need HR advice and support please do not hesitate to give us a call.
