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Furlough Leave: What It Is and What You Need to Know
Katy Cracknell • March 23, 2020
Newly-introduced by the Government, it is vital that all employers and employees are aware of this important scheme.
We’re posting this blog on Monday 23rd March in line with the government’s latest announcements of how they plan to support businesses and employees. However, as we progress through the week this blog and the advice given will be rapidly over taken by daily government updates, so please make sure that you keep checking our Blog section or sign up to our newsletter
for all the latest news straight to your inbox.
The chancellor has already set out a package of measures to support businesses including VAT holidays, 12-month business rate holidays and changing SSP eligibility
– but the biggest support package of all came last week in the form of Furlough Leave. There is still a void of information about how the process will work and be implemented but let’s take a look at what we do know:
- Information to date is sparse! Similar to the business loans system, which was launched today, we currently don’t know what we don’t know, but it is likely to be a number of days before any practical information is communicated to businesses.
- In order to qualify for the scheme, employers must designate affected employees as Furloughed workers and notify them of this change (this notification should be followed up in writing to confirm the arrangements which have been agreed).
- Furloughed workers are not a concept recognized by Employment Law and changing an employee’s status remains subject to current employment law legislation and is governed by the employees’ current contract of employment.
- This means that, in most cases, employers will have to discuss any changes with employees, seeking their agreement before making them Furloughed workers (unless you have a contract clause in relation to short-time working and lay-offs).
- The majority of employees are likely to accept being made a Furloughed worker where this is an alternative to redundancy.
- Employers will have to submit information to HMRC about the employees that have been Furloughed and their earnings will have to be submitted through an online portal. However, this portal has not been set up and more specific details will follow in the coming days.
- HMRC will reimburse 80% of salary for Furloughed workers up to a cap of £2,500 per month (the equivalent of £30,000 a year which is the national median salary).
- The scheme is for any employee on payroll on 1st March 2020. Payments will be available from the end of April and backdated to 1st March.
- Employers do not have to pay the remaining 20% to top up an employee’s salary. However, the employee does have to agree to this approach, or it may be considered to be withholding contractual pay (as above, once you have agreed terms with employees follow this up in writing to avoid any possible conflict or confusion at a later date).
- Employees that do qualify for the scheme should not conduct any work for their employer.
- Employees who are Furloughed will remain employed and therefore retain their continuous length of service.
- Employees can’t choose to be Furloughed. The choice must be that of the employers and as such employers should manage the conversations with employees.
The system is likely to be open to abuse and its anticipated that some businesses will claim that employees are Furloughed when then are in fact continuing to work. The government will take action against any such employers and rightly so, given the national effort that is being made by us all to help combat this virus. So, if you are going to utilise the scheme please ensure you adhere to the rules and regulations.
The announcements to date suggest that the costs will cover pension costs, but this is yet to be confirmed.
For any specific help and advice in relation to Furloughed workers please contact
us at Clear Bridge HR today.
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As our working and home lives continue to become ever more intertwined the blurred boundaries can lead to increased stress for employees, in extreme cases, burnout and a general decrease in employee well-being.
As we approach the end of the year, it's the perfect opportunity to ensure that your employees are making full use of their annual leave entitlements, especially if your company's holiday policy does not allow for unused leave to roll over into the following year.
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