Furlough Leave Government Guidance Published
The much anticipated Guidance for the Coronavirus Job Retention Scheme has now been published! While the mechanics of how to claim the grants have not yet been announced (we are told the portal will be available soon), many of the questions on eligibility and the detail have now been answered.
The Scheme is available to all UK employers who had a PAYE scheme established as of 28 February 2020 and will cover all employees, on the payroll from the same date. While the Scheme will cover “public sector” organisations, there are caveats around not furloughing employees who’s wages are publicly funded – which makes sense given the schools and the like will already have been allocated their funding for 2019/20.
Many of the queries I have received since Friday’s announcement have been around how much an employer can claim per employee and what the grant covers. The Guidance confirms that an employer will be able to reclaim £2,500 per employee plus the employer NICs and minimum automatic enrolment pension contributions. However, it will not cover commissions and bonuses which is bad news for employees with an income made-up largely of commission.
For employees with variable pay (including those on zero hours contracts), an employer can claim the higher of the corresponding month’s earnings in the previous year, or the average monthly earnings for 2019/20. If an employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the employee only started in February 2020, you can use a pro-rata for their earnings so far. Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of employer NICs and minimum employer pension contributions you are entitled to claim.
As we knew on Friday, it is open to employers to top-up the contribution from the Government, but there is no obligation to do so, and it will be for employers and employees to agree whether an individual is placed on furlough leave and whether their wages are reduced. An employee cannot undertake any work if they are furloughed, and the minimum period of furlough leave is three weeks per employee. The Guidance does not state that an employer is prevented from rotating employees on furlough leave which is a query I have been asked several times since Friday. Setting a three week minimum period makes more sense, it is in line with the current lockdown, and employers are only entitled to claim the grant every three weeks.
If an employee is on sick leave, which includes those self-isolating, they cannot be furloughed, unlike those who are “shielding” in accordance with public health guidance. I can foresee this creating difficulties for employers where employees (especially those on long-term sick) miraculously recover and declare themselves fit for work. Ultimately, it is an employers choice whether to furlough an employee, but absent confirmation from a medical practitioner, that the employee is fit for work, an employer might have some difficult decisions to make.
While finally, the Guidance does not prevent women from returning early from maternity leave to be furloughed, but again, this can only be accomplished with the agreement of the employer.
Hopefully this further clarity will be welcome news, but what we really want to see is this portal activated so that the grants can be claimed. If you have any questions please contact the Wolferstans New Client Co-ordinators on 01752 663295 or email firstname.lastname@example.org