COVID-19 | Furlough leave for employers
COVID-19 | Furlough leave for employers
The government announced the concept of furlough leave on 20 March 2020 and then produced guidance on 26 March on the Coronavirus Job Retention Scheme.
In this webinar, we will look at what we have learned from that guidance, how employers are implementing the scheme, and some of the trickier issues that employers are currently grappling with. We’ll also discuss common queries surrounding the scheme, how it effects those on statutory leave – such as sick leave, maternity or paternity leave, the impact of a TUPE transfer, and the impact on trade union activities, as well as a brief look at alternatives to the scheme.
Please do let us know of future topics that you are interested in, or for more information about our webinars please contact us.
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Hello, my name is Esther Maxwell and I'm a legal director in the employment team here at Shakespeare Martineau. Welcome to today's webinar on the impact of the coronavirus on your business. You'll see on your screen that you are able to ask questions. So please do ask questions along the way and I'll answer as many as I can and we'll also share a summary of questions with everyone after the webinar. So today I'm going to be speaking to you about what we have learned over the last week or so regarding the new government scheme the Coronavirus.
Is job retention scheme, I'm going to highlight some of the common issues and then look very briefly at the alternatives to the scheme. Now the government guidance came out late on the 26th of March. It was then reviewed later on the 4th of April on although some questions have been answered not all of them have I should say that any statements in this webinar come with a health warning.
This is a rapidly evolving area of Law and things change quickly some statements made may let me For be out of date as more guidance is forthcoming from the government and hmrc a brief bit of History first like many of us. I had not heard the term furlough used before and as I'm sure is the case for many employment lawyers Now find myself using it several times a day a quick Google search shows that the word originally was a temporary leave of absence granted to a government or institutional employee to allow them to return home. So what is the furlough leave that we are dealing with now in brief?
If the government is calling it The coronavirus job retention scheme and it works as follows firms can claim a grant of eighty percent of wages up to a maximum of two thousand five hundred pounds per employee per month plus the associated employer National National Insurance contributions and minimum auto-enrollment employer pension contributions on that wage that's in effect raises the cap that the government has set to a maximum ceiling of 2000.
204 pounds of total Grand per employee. This is a temporary scheme in place for three months starting from the first of March 20 20, but it may be extended if necessary in order to claim employers must have created and started a pay as you earn payroll scheme on or before the 28th of February 20 20 and rolled for a pay as you earn online and have a UK bank account. Now employees can be on any type of employment.
Act including full-time part-time agency workers flexible contracts or zero-hours contracts the employees will only be able to access the scheme provided that they do not do any work for the employer employees should be furloughed for a minimum period of three consecutive weeks employees can be furloughed multiple times.
But each separate instance must be for a minimum period of three consecutive weeks now on the slide, I have included a link to the Them page which sets out details of the scheme and is definitely worth a read moving on now to the common queries in issues that have Arisen as a result of the implementation of this scheme as well as some clarity that has been provided as a result of the recent updated guidance. So the first point is statutory leave now what happens with employees who are on various forms of statutory leave.
Now the normal rules apply for maternity and other forms of Parental leave and pay employers can claim through the scheme for enhanced earnings related contractual pay for employees who qualify for either maternity adoption paternity pay and shared parental pay. What about sick leave if you employee is on sick leave or is self isolating and they will be eligible for statutory.
Sick pay you cannot claim for employees whilst they are getting Such tree sick pay however, they can be furloughed and claimed for once they are no longer cleaning statutory sick pay and the case of employees who are shielding you can claim for furloughed employees who are shielding in line with public guidance, or if they need to stay at home with someone who shielding provided they are unable to work from home and you would otherwise have to make them redundant.
Moving on now to public sector organizations. Now, the guidance says that the government expects that the scheme will not be used by many public sector organizations as they continue to provide essential Public Services.
It goes on to say that where employers receive Public Funding for staff costs and that funding is continuing they expect employers to use that money to continue to pay staff in the usual fashion and not to follow them note that this also applies to non-public sector employers who receive Public Funding for staff costs. It does say that in a small number of cases.
For example where an organization is not primarily funded by the government and whose staff cannot be redeployed this Maybe appropriate so that could include individuals who may be paid through commercial Ventures for example cafes or retail sites in cases like that. Those employees could be furthered now. We understand that universities UK is in discussions with the government regarding universities and further leave. So we expect that greater Clarity would be provided on this shortly.
Moving on now to the National living wage a common query that we received when the scheme scheme was first launched was whether if the employee was paid eighty percent of their wages and this took them below the national living wage whether that would have been a breach of the legislation around the requirement to pay National living wage Clarity is now being provided. This will not be a breach provided that the employees are not working if they come back to work to undertake training then they need to be paid the national living wage.
But whilst they are on furlough leave this would not be a breach of the legislation moving on to the next slide. Now. The first issue is in relation to a 2p transfer now to P stands for the transfer of undertakings protection of employment regulations 2006 and applies broadly speaking.
We're employees transfer from one organization to another The current guidance states that employees need to be on the employers payroll or not all before the 28th of February 20 20 if they're for an employee to pee transfers to a new organization after that date then on the face of it. They may not be eligible to be furloughed and this appears to be the current approach that hmrc are taking we however think this is incorrect under to pee all the rights and liabilities of the employee transfer to the new employer.
The fact that the employee has a new pay-as-you-earn reference should not cause the employee to be penalized if hmrc were right. The new employer would have no option but to make those individuals redundant but they would still be entitled to full redundancy entitlements because of course continuity of service is protected under to P. Now. We think that drives the coach and horses through the whole purpose and intent of the new coronavirus job retention scheme.
We are therefore hopeful that the government clarify as this at some point, but if you are involved in a teepee transfer within those time frames, it's worth bearing that in mind moving on now to some specific queries that have Arisen as a result of trade unions and we have been asked to advise whether furloughing staff is something which can be collectively agreed with a recognized Union and then implemented without the need for individual agreement from employees and Theory this is likely to be possible, but we suggest that you take advice on your A virtual organization situation as it will depend amongst other things on the terms of the Collective Agreement with your Trade union note as well that in the guidance employers are required to confirm in writing to the to the individual employee confirming that they have been furloughed and that a record of that communication is kept for five years.
Other issues that have Arisen affecting trade unions or whether furloughed Trade union Representatives can be said to be working if they provide their representative duties whilst their own further leave now interestingly unites a taking a pragmatic approach to this and are using the following wording in relation to some of their local Representatives who are being furloughed in an agreement with employers.
So unite as saying that it is not permissible under the government scheme for any fellow Employee to undertake work or provide services for the employer or any other employer for any time. However, any employee can volunteer to perform unpaid work? It is recognized that any union representative followed under this agreement who carries out any representational activity is doing so on a voluntary basis and not for payment purposes. It's interesting there for that. That's how the unions are dealing with that issue particular issue.
Now I'm quickly going to run through some miscellaneous points that have been clarified as a result of the updated Guidance. The first one is that the government has stated that the grant will be made from the date that the employee was furloughed Claims can be about dated until the 1st of March where employees have already been furloughed a second point of clarity has now been provided over what can actually be claimed.
It is now clear that what an employer can reclaim is 80% of wages passed over time fees compulsory commission payments however, discretionary bonuses and tips are not included neither our discussion discretionary commission or benefits and kind so I think the key issue there is that contractual payments can be claimed but discretionary payments and benefits in kind cannot be claimed the guidelines also now state that an employee who has been furloughed can go and Look for another employer provided their contract of employment allows this now this is interesting and it's not something that was expected from the government. But we believe they put it in place so that employees who are furloughed can go and do work for essential areas such as to do with food production or deliveries.
Another key issue of clarification is how this affects apprentices now apprentices can be furloughed in the same way as other employees and they can continue to train whilst Close, however, you must pay your prentices at least the apprenticeship minimum wage a national living wage or national minimum wage as appropriate for all the time that they spend training.
This means you must cover any shortfall between the amount that you claim for that wages through the scheme and their appropriate minimum wage now both the apprenticeship Levy and student loans should continue to be paid as usual grounds from the job retention scheme to not cover these now my final Slide gives a brief overview of alternatives to furlough leave and this includes things such as redundancy pay cuts unpaid leave and if your contract allows short time working or lay off. These are all possible Alternatives that should be considered when deciding how best to proceed in these difficult times. I do not have time to go into each one in detail today. However, my colleague might Gibbs cover these issues in the last employment law webinar last week.
So if you would like to have a little listen, please do look at our website and hear what Mike had to say about that. Thank you for listening to this webinar. I hope you found it useful and relevant in the current circumstances. I will now answer a couple of questions and we'll also send a note of all the questions and answers along with a recording of the webinar. The first question relates to what an employee can do whilst on furlough leave for example, can they forward emails to those still working for them to respond to in the interests of business continuity?
The guidance is provided a little more detail on this in that it says you cannot to ask your employee to do any work that makes money for your organization or provides services for your organization. They can however take part in volunteer work or training in terms of forwarding emails. The question will therefore be whether it makes money for your organization or provides a service if the answer to that is yes, then forwarding emails may prove.
Of difficult and may constitute the employee working. If there is another way around it. For example by someone still working having access to that inbox and forwarding the emails as necessary. That would be the safest approach if however they are not going to be making money for your organizational providing Services then forwarding emails in that particular scenario is less likely to be a breach of the guidance.
Another query we've had is what would happen with an Who was signed off sick on the 28th of February and is now four weeks later returned to work on a phased return.
Well in that situation when they are off sick, they will be able to get statutory sick pay and they would not be eligible to be furloughed when they return to work and are no longer receiving statutory sick pay and if provided there's no work for them to do then they would be eligible to be furloughed.
A further question relates to a situation where an employer has already implemented a pay cut of 10% and the corresponding 10% reduction in hours across its Workforce. But then decides that they need to furlough some staff. Can they do this and which salary does the 80% apply to the old higher salary all the new reduced one.
Now, the guidance does say that if an employee is working but on reduced hours or for reduced pay They will not be eligible for this scheme.
Now we do not think that this means that an individual and reduced hours cannot be furloughed. It's just that an individual cannot do any work for the employer during the furlough period even if light is on a reduced basis accordingly our view that is that employees in this particular situation can be furloughed provided.
There is no work for them to do in the alternative would be redundancy the next question which is which side With the 80% Grant apply to is more difficult the government guidance talks about usual pay and there are a couple of options with that the usual pay you would have thought would be the higher pay the one which the employee used to receive before the pain reduction was made. However, it could be interpreted on the basis of the pay that the employee was receiving when the application for the grant took.
A place which would be the reduced pay I'm afraid therefore. We have no particular Clarity on that at this stage. Thank you everyone for all the great questions. I will follow up on all of these after the session and share these with you for further advice and guidance on the coronavirus. Please contact our dedicated resource Hub at shma.co.uk-- and if you would like further information or wish to discuss a specific query in more detail.
Well, then, please do of course get in touch. Thank you very much.
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