FAQs: Coronavirus Job Retention Scheme - Furloughing Employees
Updated: Apr 19, 2020
Answers to frequently asked questions about the furlough scheme and how it works.
"Ask your employer whether you can be furloughed under the Coronavirus Job Retention scheme. If they refuse, make sure they put their reasons in writing, and get legal advice, as soon as possible."
Last updated: 19th April 2020
Please note that the government is constantly making changes to the rules of the scheme with the latest changes made on 17th April 2020. We will continue to update this page accordingly.
What is the scheme about?
It has been set up by the government to support employees who would otherwise be laid off (asked to stay home or take unpaid leave) or made redundant, as a result of the coronavirus crisis. The government will give the employer a grant through the scheme to cover part of the employee's pay so that they can retain the workforce during this crisis.
How does the scheme work?
If your employer applies to the scheme the government will grant your employer 80% of your normal gross pay (before tax) up to £2,500 per month. Your employer will then pay you the net amount after deducting National Insurance and pension contributions and other normal monthly deductions.
You will not be paid more than £2,500, even if your normal monthly gross pay is more than this amount. You will also not be paid any bonus, commission or fees you normally get, unless they form part of your basic pay. Your employer may decide to pay you the additional 20% so that you receive 100% of your pay, but they are under no obligation to do so.
The scheme starts from 1st March 2020 and was for an initial period of three months. This has now been extended to four months and employers can use the scheme anytime during this four month period. The scheme may be further extended, if necessary, says the government. Payments can be backdated to 1st March 2020 and will continue until the scheme ends, or the employee is asked to return to work.
Employers can expect to have access to the scheme from 20th April 2020, and claims can be submitted for each employee at least every three weeks. This means employees can be furloughed for a minimum period of three consecutive weeks at a time.
What if an employee's normal pay varies from month to month?
The furlough amount an employer can claim for would depend on the employee's previous earnings. If you have been employed for 12 months before the claim is made, your 80% furlough pay would be calculated based on either:
the amount you earned in the same month last year; or
an average of your monthly earnings from the last year - whichever is higher.
If you have been employed for less than 12 months, your 80% furlough pay would be based on the average of your monthly earnings since the start of your employment.
If you started work in February 2020, your 80% furlough pay would be based on a pro-rata calculation of your earnings so far.
Who can be furloughed under the scheme?
All workers including employees on any type of contract (temporary, fixed, full-time or part-time), agency workers, zero-hours or casual workers, apprentices, migrants and other workers on all category of visas including foreign workers, provided you meet the conditions below:
The government initially announced that you must have been employed and on your employer's PAYE payroll on or before 28th February 2020 to qualify for the scheme. This cut-off date has now been extended to 19th March 2020 so that more people can benefit from the furlough scheme. This means that any employee who was employed and was on their employer's PAYE payroll on or before 19th March 2020 will now be eligible to be furloughed under the scheme.
Employees that were employed as of 28th February 2020 and on their employer's PAYE payroll, but were made redundant or stopped working between 28th February 2020 and 19th March 2020, can also qualify for the scheme if the employer re-employ them and put them on furlough.
Being on the employer's PAYE payroll means that the employer must have made an RTI submission notifying HMRC of the employee's payment on or before 19th March 2020. This is an important qualifying element of the scheme, and this is where it gets tricky for those who started jobs after 28th February 2020. The problem is most people who started their job after 28th February, if they are paid monthly, would not be paid until 31st of March, this means they will not be on the PAYE payroll on the 19th of March, and may not qualify for the scheme.
The new eligibility cut-off date also applies to staff who have transferred from one organisation to another under TUPE.
You must also not undertake any work for your employer during the period of your furlough - not even working from home, working for reduced pay, or working reduced hours. However, you may undertake volunteer work or training, as long as you do not provide any service or generate any revenue for the employer.
If your employer has notified you that you are being furloughed under the scheme, they cannot ask you to work (including from home), during this period. If they do, you will no longer be eligible for the scheme, and your employer may be breaking the law if they make a furlough claim for an employee who is in fact, working.
If you have had your hours or pay reduced due to coronavirus, and cannot be furloughed because you are not eligible, you may be eligible for benefits.
What other category of workers can be furloughed?
Company directors - provided they do not undertake any work that generates any revenue for the company.
Limited Liability Partnerships - provided they are 'salaried' members.
Those on statutory leave - maternity leave, paternity leave, shared parental leave, adoption leave, sick leave and parental bereavement leave.
Workers who become sick while on furlough - they will continue to have their right to Statutory Sick Pay (SSP). If they become sick while on furlough, their employer will have to decide whether to move them to SSP or keep them on furlough at the furlough payment rate. One way to decide this would be to consider which would be more financially beneficial to the worker, SSP or furlough? In addition, workers on sick leave or self-isolating can be furloughed after they finish their sick leave or isolation.
Unpaid leave - provided their unpaid leave started after 28th February 2020.
Redundant employees - provided they were made redundant on or after 28th February 2020. After they have been made redundant, the employer can re-employ them and put them on furlough.
Self-employed workers - provided they are on the PAYE payroll. Otherwise, self-employed workers may apply to the Self-employment Income Support scheme.
Shielding workers - including workers, who need to stay home with someone who is shielding, provided they cannot work from home, and would be made redundant otherwise.
Workers with caring responsibilities - that is, workers who cannot work because they have to care for children or other family members as a result of coronavirus.
Those who work for individual employers - including those who work for individuals as nannies (and presumably, cooks, cleaners, etc.) can be furloughed provided they are paid through PAYE.
What if an employee works for more than one employer?
You can be furloughed by each employer separately and the normal rules will apply to each employer as a separate job. The assumption here is that your contractual hours for both employers do not overlap. This means you could potentially receive more than £2,500 between the two jobs, if you earn high enough.
Having said that, while you are furloughed by one employer, you are allowed to start a new job with a new employer and work the same contractual hours as you would for the employer who furloughed you. However, you will only receive your normal pay by the new employer, and not furlough pay. You will need to check your contract to see whether there are any restrictions on working elsewhere.
What is the process for furloughing an employee?
The affected employees must be informed in writing that they are being furloughed (subject to employment law). Employees should not accept verbal confirmation of this, and a written furlough agreement must be made. The fact that the employee is being furloughed may affect their employment contract, which may need to be varied.
In cases where there are sufficient number of employees, the employer may need to conduct a collective consultation process. Employees who refuse to be furloughed would be at risk of dimissal.
If you are an employee or worker who has been laid off (asked to stay home or take unpaid leave), or made redundant after 28th February 2020 because of coronavirus, you can ask your employer to furlough you instead (or re-employ you, in the case of redundancy, and then furlough you).
If your employer refuses to furlough you, ask them to put their reasons in writing, and then take legal advice.
What happens to non-monetary benefits and salary sacrifice?
Non-monetary benefits such as taxable benefits in kind and salary sacrifice schemes would not be included when calculating the 80% furlough pay. For instance, the value of health insurance or a company car would not increase the amount on which the 80% is based. Where an employer provides such benefits, they can be paid to the employee in addition to the furlough pay.
Do employers have to pay first and claim later?
Yes, that's the idea. But the reality is that many employers are facing cash flow problems and are not in a position to pay their employees 80% of their monthly pay now and claim it back later when the scheme opens on 20th April 2020. The constant changes to the rules of the scheme also does not give employers a lot of confidence that they will actually recover from the government any furlough pay made to employees.
It is only when the scheme is fully functional and claims are being paid that employers will grow in confidence. Until then, employers with sufficient cash flow have the discretion to furlough staff and pay them first, and then claim later. Some employers may pay first with the condition that the employee repays the employer any furlough pay if the employer is unable to recover the money from the government.
Employers who need support with their cash flow may be eligible for the government's coronavirus financial support.
Can an employer require an employee to use their holiday during furlough?
Yes. Employment law gives employers the right to tell employees and workers when to take holiday, provided they give the required notice. That is, twice as many days' notice as the number of days they require the employee to take. For instance, if your employer wants you to take two weeks' holiday, they must give you four weeks' notice.
The government has introduced a new law that allows employees and workers to carry over up to four weeks' paid holiday to the next two holiday leave years. This relates specifically to any holiday the employee or worker cannot take in the current holiday year, due to coronavirus. This may also apply to any furloughed employee who cannot reasonably use their holiday in the current holiday year.
Which employers are eligible to claim under the scheme?
Any UK employer, provided they have:
created and started a PAYE scheme by 28th February 2020;
enrolled for PAYE online; and
a bank account.
The scheme is open to businesses, charities, recruitment agencies and public authorities.
Can an employer rotate employees on furlough?
Potentially, yes. Some employers may still have work for some of their employees, but not enough work to go round. Given that employees can be furloughed under the scheme for a minimum period of three consecutive weeks at a time, employers can potentially rotate this period between their employees.
How can an employer claim under the scheme?
The government has announced that the scheme will open for applications on 20th April 2020. All claims would be made online only and it is expected that claims would be paid within 6 working days. Sufficient guidance is available on the government's website for employers to make a claim themselves, unless they choose to use an agent.
But I still have questions not answered here.
Typically, employees and employers may have case-specific questions and looking for specific answers. For instance, an employee who was recently made redundant and wishes to be re-employed and put on furlough, or an employer who wants to ensure that they are not faced with a potential claim by an employee (or former employee) after the crisis, and so on.
If you have case-specific or general questions, please send us an email to firstname.lastname@example.org, or contact us on our dedicated mobile number - 0749 623 9328 including by WhatsApp.
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If you have further questions as an employee or employer please contact us.