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Answers to Questions about the Coronavirus Furlough Scheme


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What is the furlough scheme?

‘Furloughed worker’ is not a recognised term in UK employment law, although it is commonly used in the USA. Government guidance says someone is furloughed if they remain employed but are not undertaking work (in the UK the legal term would be ‘laid off’).  You generally have the right to be paid  your full wages if you are willing and able to work, even if your employer cannot provide you with any work. Some employers will have a contractual right to lay off workers without pay but this is rare in practice.

As a result, your employer will need your consent to put you on furlough with reduced pay. To do so unilaterally could be a breach of contract and an unlawful deduction from wages.

The  Coronavirus Job Retention Scheme (Furlough Scheme) helps you to keep your job during the coronavirus outbreak. If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wageHM Treasury announced that the furlough scheme has been extended from 31 May 2020 to the end of June.

If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss becoming classified as a furloughed worker with you. This would mean that you are kept on your employer’s payroll, rather than being laid off. The scheme allows your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month. You remain employed while furloughed.  The Government intends the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020, but will extend if necessary.

SeeCOVID-19 Guidance for Employees, COVID-19 Business Support


Am I entitled to furlough ?

The Coronavirus Furlough Scheme applies to all workers who were on their employer’s PAYE payroll on or before 19 March 2020 (previously 28 February 2020),  provided your employer had submitted real time information payroll data to HMRC by that date. Workers hired after 19th March 2020 cannot be furloughed.


How much money should I get?

Your employer will pay your regular pay through payroll as normal. The furlough scheme pays a grant to your employer through the HMRC Furlough Portal which goes live on 20th April 2020. Your employer can pay full pay but will only receive a refund from the Government of 80% of your wages up to a maximum of £2,500 per month. Your existing contractual right to pay does not change so your employer must fund the difference. What this means is that there should be no difference to your regular pay.

Your employer must disregard anything which is not regular salary or wages.  That means things like performance related bonus or discretionary payments (including tips), conditional payments (e.g. where a threshold must be met) and any non-financial benefits cannot be included in your salary or wages. Your employer cannot use the grant to fund employment related benefits.

You must be paid the entire amount without deductions for fee’s or administrative charges etc.

Example 1

X Ltd employs Mr A at an annual salary of £24,000, so £2,000 per month. Mr A has opted out of auto enrolment.

Each month, Mr A currently receives net pay of £1,655 which is after deducting PAYE of £191 and employees NIC of £154. On this salary, the employer pays employers’ NIC of £177.

The available grant for the employer is the lower of

(a) 80% of £2,000, and

(b) £2,500

Plus employers’ NIC on this amount

So X Ltd claims a grant of £1,600 plus £122 = £1,722.

The net amount of cash required by X Ltd to furlough Mr A based on maintaining the existing salary is £2,000 + £177 – £1,722 = £455 per month.

Example 2

X Ltd employs Mr B at an annual salary of £42,000, so £3,500 per month. Mr B has opted out of auto enrolment.

Each month, Mr B currently receives net pay of £2,675  which is after deducting PAYE of £492 and employees NIC of £333. On this salary, the employer pays employers’ NIC of £383.

The available grant for the employer is the lower of

(a) 80% of £3,500 = £2,800, and

(b) £2,500

Plus employers NIC, £245, on this amount

So X Ltd claims a grant of £2,500 plus £245 = £2,745.

The net amount of cash required by X Ltd to furlough Mr A based on maintaining the existing salary is £3,500 + £383 – £2,745 = £1,138 per month.


Are all workers eligible for furlough?

Furlough is not limited to those employees who would otherwise be made redundant.  It applies to any who are furloughed by reason of circumstances as a result of coronavirus or coronavirus disease.


Trade Union Reps.

Whilst on furlough, employees who are union or non-union representatives may undertake duties and activities for the purpose of individual or collective representation of employees or other workers. It is not a breach of furlough to accompany a colleague during disciplinary or grievance meetings, or redundancy consultation.


Agency Workers

Under section 44 of the Income Tax (Earnings and Pensions) Act 2003, Agency workers  are treated for income tax purposes as holding employment with their agency and their income is taxed as earnings from employment. This means that they are paid via PAYE and so are eligible for support under the scheme including where they are employed by umbrella companies. The body which has to take the decision to furlough is the one which pays via PAYE – either the agency or, where it operates furlough, the umbrella company.


Gig workers

Payment under the Scheme depends on whether you are paid through PAYE and not on your employment status. So, any worker paid through PAYE is eligible for furlough. If you are not paid through PAYE and pay tax through self-assessment, you may be eligible for support under the separate scheme for the self-employed.


Zero hours workers

Zero-hour workers are eligible for payment under the furlough scheme if they are paid via PAYE. Pay is calculated at 80% of their average earnings, based on the previous year, the 2019-20 tax year or, where they have not worked a year, the period since they started work.


Apprentices and Trainees

Apprentices and those on training arrangements can be furloughed as other employees, so long as they are paid via PAYE. Whereas “ordinary” employees cannot do any work while furloughed, apprentices can continue to train while furloughed.


Fixed Term Workers

Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Where a fixed term employee’s contract ends because it is not extended or renewed, they will no longer be entitled to furlough. Employers can extend a fixed-term contract that was due to expire and furlough the worker.


Workers who are also carers

Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed. Under section 57A Employment Rights Act 1996 you are allowed unpaid time-off to care for dependants during emergencies. The furlough scheme has obvious advantages since it pays you for long-term and pre-existing caring responsibilities.


Workers on work visas

Grants under the scheme are not counted as access to public funds, and so employees on all categories of work visa can be furloughed.


How does furlough affect my existing employment rights?

The Government has promised to repay employers who don’t dismiss employees during the coronavirus crisis. This promise is fulfilled through the Furlough Scheme, which is a grant, so your employer does not have to repay it.  Furlough does not change any of your contractual or statutory rights such as the right not to be dismissed unfairly, the right to a redundancy payment, protection from discrimination or rights to paid annual leave. It does not give your employer the right to place you on furlough or reduce your wages to 80%.


Statutory leave

If you are on statutory leave such as maternity or paternity leave, the HMRC Guidance says that the normal rules for maternity and other forms of parental leave and pay apply. Your employer can claim enhanced contractual payments through the scheme for enhanced (earnings related) contractual pay for employees who qualify for either maternity pay, adoption pay, paternity pay or shared parental pay.


Holiday Pay

Your statutory right to holidays and holiday pay is not affected by the scheme and the Working Time (Coronavirus) (Amendment) Regulations 2020 allow you to carry forward your four weeks’ annual leave in Regulation 13 of the Working Time Regulations 1998 into the next two leave years where it was not reasonably practicable for you to take it because of Coronavirus.

Whilst furloughed you will continue to accrue leave as per your employment contract. You can agree with your employer to vary holiday pay entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below.

You can take holiday whilst on furlough. Working Time Regulations (WTR) require holiday pay to be paid at your normal rate of pay or, where your rate of pay varies, calculated on the basis of the average pay you received in the previous 52 working weeks. Therefore, if you take holiday while on furlough, your employer should pay you your usual holiday pay in accordance with the WTR. Employers will be obliged to pay the additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need. This applies for both the furlough period and the recovery period.

The ACAS Guidance also says that holiday pay should be paid just like any other wages.


Sick Pay

The Statutory Sick Pay (General) (Coronavirus Amendment) Regulations 2020  say that SSP will be available to anyone isolating themselves from other people to prevent infection or contamination with coronavirus, in accordance with guidance published by Public Health England, NHS Scotland or Public Health Wales.

The Statutory Sick Pay (General) (Coronavirus Amendment) (No. 3) Regulations 2020 provide that a person is deemed to be incapable of work if they are unable to work because they fall within the extremely vulnerable category and have been advised to shield.

The HMRC Guidance says that you are not entitled to furlough if you are getting Statutory Sick Pay, but you can be furloughed once you are no longer receiving Statutory Sick Pay.  If you are self-isolating you are entitled to SSP. Your employer can switch you from sick pay to furlough and vice versa, although this should not be abused by using furlough to ‘top up’ small amounts of SSP for short term absences.


Coronavirus Isolation Note

You must Get a Coronavirus Isolation Note  if you have been told to stay at home because you:

  • have symptoms of coronavirus and have used the 111 online coronavirus service
  • have been told by a healthcare professional that you have symptoms of coronavirus
  • live with someone who has symptoms of coronavirus

You can self-certify for the first seven days off work so you don’t need any evidence for your employer. After that, your employer may ask for evidence of sickness absence and you can provide your coronavirus isolation note as evidence of the advice to self-isolate.

If you don’t have an email address, you can send the coronavirus isolation note to a trusted family member or friend, or directly to your employer. The service can also be used to generate an isolation note on behalf of someone else.


Shielding Employees

People who are at very high risk of severe illness from coronavirus because of an underlying health condition should stay at home and avoid any face to face contact. That is described as “shielding”. The advice also covers people who live with people who need to shield: “If you have someone else living with you, they are not required to adopt these protective shielding measures for themselves. They should do what they can to support you in shielding and they should stringently follow guidance on social distancing, reducing their contact outside the home. [see – Guidance on shielding and protecting people defined on medical grounds as extremely vulnerable from COVID-19] If you fall within this category you are entitled to furlough and do not have to be paid sick pay.


What is a furlough agreement?

Once agreed your employer must confirm in writing that you have been furloughed to be eligible to claim. Contact your employer if you do not receive confirmation.


Can I work for my employer during furlough?

You cannot work for the employer who furloughed you even if you receive a top-up salary. The HMRC Guidance says that once you are on furlough you will not be able to work for your employer, including

  • making money for your employer or a company linked or associated to your employer
  • providing services to your employer or a company linked or associated to your employer

HMRC has called for employees to report any abuse of the system by employers who make employees work.


Can I do training whilst on furlough?

Once you are on furlough, you can undertake training. Your employer must pay you at least the statutory minimum wage even if this means that your employer must top up your wages above the 80% level given by the scheme.  The HMRC Guidance says that “If workers are required to, for example, complete training courses whilst they are furloughed, then they must be paid at least their appropriate minimum wage (NLW, NMW or AMW) for the time spent training, even if this is more than the 80% of their wage that will be subsidised. Records of the time the employees are required to undertake training will have to be kept. Note that providing training is likely to constitute work”.


Can I volunteer to work for someone else?

You can volunteer elsewhere whilst on furlough so long as the organisation you volunteer for does not provide services to or generate revenue for, or on behalf of your employer.


Can I be furloughed by more than one employer?

If you have more than one employer, each employer will be treated separately. You can be furloughed by more than one employer, or furloughed by one employer while continuing to work for another employer.


Can I work for another employer whilst furloughed?

If you have two jobs with two separate employers and are furloughed in one, you can continue working for the other so long as there is no restrictive covenant in your employment contract.


Can I be put on and off furlough?

You can be rotated on and off furlough. If your employer chooses to place you on furlough, you will need to remain on furlough for a minimum of 3 consecutive weeks. However, your employer can place you on furlough more than once, and one period can follow straight after an existing furlough period while the scheme is open. The scheme will be open for at least 3 months.


I left my job before the furlough scheme. Can I be re-employed and put on furlough?

If you were made redundant, or your contract was terminated on or after 28 February 2020, your employer can re-employ you on furlough and claim for your wages through the scheme.

Do I have a right to be re-engaged after termination?

No. The decision to re-engage and to furlough is for only for your employer. But your employer refusing to do so may create a discrimination claim in the employment tribunal if some of your former colleagues are taken back and you are not.

Can furlough be backdated?

Claims can be backdated until 1 March where you have already been furloughed. Because it is a reimbursement scheme, your employer cannot reclaim sums that have not been paid.

If I am re-engaged, do I have to re-pay termination payments that I received?

If you were made redundant you may have received statutory or contractual redundancy payments. A dismissed employee may also have received payment in lieu of notice or a payment for accrued but untaken holiday pay. The Furlough Scheme does not require you to pay the money back, neither is there an obligation to do so under employment law.  more generally. The terms on which you are re-engaged is a matter for agreement between you and your employer.


TUPE & Furlough

Newly  TUPE’ d employees are eligible for furlough if the previous business transferred after 28th February 2020 and either the TUPE or PAYE business succession rules apply to the change in ownership.


References

Treasury Direction to HMRC

Coronavirus Act 2020

Working Time (Coronavirus) (Amendment) Regulations 2020

ACAS – Coronavirus Advice for Employers and Employees

HMRC  – Guidance: Claim for your employees’ wages through the Coronavirus Job Retention Scheme

Claim for your employees’ wages through the Coronavirus Job Retention Scheme (CJRS): A step by step guide for employers

GOV.UK – Guidance on shielding and protecting people defined on medical grounds as extremely vulnerable from COVID-19

House of Commons Briefing Paper: Coronavirus Job Retention Scheme: How will it fit with employment law?


Updated: 20/04/2020

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