Coronavirus: guidance for employers on furlough leave

Advice note on the furlough scheme for guidance only

Furlough scheme

Lay off

Unless your contract allows for you to lay staff off - that is send them home without pay (which is unlikely) - they are technically entitled to full pay if they are ready, willing and able to work.

Furlough

Further details were published on 27 March and are here: Coronavirus Job Retention Scheme. We appreciate that some of the wording around public funding appears unclear but our view is that the GOS fees are not “staff costs” and that optical practices are not “primarily funded by the government” meaning the scheme would be appropriate for some staff in the optical sector (but not those who are continuing to work, unless they are furloughed in three week blocks). We are acutely aware of the issues this may cause for those who are closing for the most part but remaining open to provide urgent care only, in that under the rules those remaining to provide occasional urgent care could not be furloughed at the same time. The AOP has raised this as part of sector discussions about ongoing urgent and essential care but based on current information those furloughed cannot do any work for that employer.

This guidance has not yet been updated following these further details being released but will be updated shortly.

This advice note is for guidance only and you should seek advice from our employment team on any specific circumstances.  See guidance for employers.

 

1. How do we furlough staff?

  1. Consider which staff you want to furlough and which staff you will need to keep in the business if you are remaining open. Employers will want to ensure that they are retaining the skills they  need within the business at this most challenging time. You will therefore need to identify those with the specific skills you need to retain in work. You must be careful not to discriminate against staff and therefore keep a clear record of the reason you are choosing to furlough some staff and not others. 

  2. Have a discussion with your staff about furlough and then consult with staff on an individual basis.   

  3. You may want to ask for volunteers to be furloughed and if there are too many volunteers you may want to prioritise vulnerable staff for furlough, such as those who are suffering    with a disability, are over 70 or pregnant. 

  4. You may use our template letter to give to any employees you wish to “furlough” and ask them to sign and date the Agreement where possible. This can also be done by email acceptance if it is not possible to physically sign the Agreement. 

  5. If you are paying staff the additional 20% of salary on top of the 80% under the furlough scheme, that is fine. If you are not intending to pay the additional 20%, you will need staff to agree to accept a 20% reduction in pay. We suggest you obtain staff consent in writing.

  6. As it stands, employees should not do any work at all in the furlough period.

2. Who can access the scheme?

All UK businesses are eligible to use the scheme, regardless of size.

3. How will the scheme operate?

  1. The employer will designate affected employees as ‘furloughed workers’ and notify them of this change.

  2. The employer will then submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. Further guidance will be given by HMRC as to the information the employer will have to provide. It is likely to take around 6 weeks for the portal to be up and running. 

  3. HMRC will then reimburse the employer 80% of all furloughed workers wage costs - that is, it is expected that this includes pension contributions and national insurance payments and so on - up to a cap of £2500 per month.

  4. Provided the employee has agreed, there is no obligation on the employer to make up the additional 20% of wages  but they may choose to do so. We have included this as an option in our template letter.

HMRC are working urgently to set up a system to reimburse these monies as the current systems are not set up to facilitate payments to employers. At the press conference the Chancellor indicated that he hoped the first grants would be paid before the end of April. He also stated that claims could be made for wages lost since 1 March.

If in that time you will have difficulty paying wages, you should see whether any of the available schemes might assist in terms of business interruptions loans and so on.  See COVID-19: Support for businesses

The scheme is intended to run for three months but the Chancellor said that he would not hesitate to extend this period if necessary.

 

4. Can an employee request to be furloughed?

An employee can ask for this but it is entirely up to the business as to whether they wish to accept, subject to existing employment law and the obligation not to discriminate under the Equality Act 2010. 

5. Does the scheme apply to workers as well as employees?

The scheme is open to anyone on PAYE (therefore just ruling out the self-employed).

6. Does holiday continue to accrue during furlough?

Yes

7. If staff have already been made redundant, can they be invited to return to work and be furloughed?

This has not yet been clarified, although we think it may be possible if this happened very recently.

8. If employees have already agreed to work shorter hours, and have agreed contractual changes to this effect, do they qualify for furlough at 80% of their wage for their original hours?

No. This is highly unlikely (although the full scheme details have yet to be released).

9. What about holiday during furlough?

Employers can ask staff to take holiday during furlough in the usual way - that is, in accordance with their contract (see also our Common Employment questions).