Well, this depends.
If there is a layoff clause in an employee’s contract and this clause is exercised, there is no entitlement to salary.
If an employee agrees to being placed on Furlough leave then they will be entitled to 80% of their usual salary (subject to the £2,500 cap).
If neither of the above apply (i.e. there is no lay off clause and they have not agreed to be placed on Furlough Leave) then the employee is entitled to their full salary.
Any UK organisations with employees who has created and started a PAYE payroll scheme on or before 28 February 2020 can apply. This includes:
The portal to facilitate the reimbursement has not yet been created. As you can imagine, this is no easy task and HMRC are working as quickly as possible to put this in place.
Once it is up and running, you can reclaim a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
Those Employees who were on your PAYE scheme on or before 28 February 2020, and on a contract of employment, including:
Furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.
Furlough Leave is initially proposed for up to 3 months (and may be backdated to 1 March 2020) which could be extended should the government decide.
There is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks.
Yes – proving adequate notice has been given. Generally speaking an employer has to provide two days’ notice for every day they want an employee to take.
You will only be able to reclaim in respect to those employees on your PAYE scheme on or before 28 February 2020. If their start date is later than this, they will not be eligible.
The key aspect is to determine what the effective cause of an employee’s absence is. In this situation – if they are genuinely sick and meet the criteria under Statutory Sick Pay (“SSP”) provisions, it is likely that they will have to switch to SSP.
No. An employee is only entitled to SSP if they are self-isolating in line with the regulations laid down by Public Health England (“PHE”), based on advice from NHS-111 and if they are presenting symptoms (or if they live with someone who is). PHE encourages ‘Vulnerable groups’ to practice social-distancing as opposed to self-isolation.
It is important to distinguish between non-executive directors and executive directors. Non-executive directors are not employees and as such will not be entitled to the benefits under the Furlough Scheme. In contrast, executive directors are internal employees of a business and the usual cap will apply. If a director is also a shareholder, they are likely to be on a low salary / high dividend remuneration package. They should consider that the furlough reimbursement is likely to only apply to 80% of salary and not to any dividend payments.
Agency firms will be able to put their employees on furlough leave – providing existing employment legislation is adhered to.
Fixed term employees can be placed on furlough leave as with any other permanent employee.
An employer can claim for the higher of:
The selection criteria could be based on factors such as length of service, assessment on last year’s appraisal, etc.
Alternatively, an employer could also seek volunteers for the scheme.
In light of recent events, it is likely that a Tribunal would not be overly critical of an Employer in deciding who to place on Furlough Leave.
Whilst at first glance, this may raise issues with discrimination (potentially age and disability related), an Employer may be able to show that this selection is fair if it can be based on a legitimate aim and may be justified.
Not at all. If they are working, however infrequent, then they will not be eligible under the scheme. Even checking emails, taking business calls could be construed as working and as such an employer would not be able to reclaim 80% of an employee’s wages.
However, an employee is able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
It is unlikely that the government will allow an employer to reclaim a further 14 days SSP.
Fewer than 20 employees there is no need for collective consultation process.
An employer cannot impose an 80% reduction in wages unless the contract of employment provides for this. An employee can agree and this process takes as long as is necessary for an agreement to be reached.
For over 20 employees, this is not likely to be the case unless an employer is proposing to make dismissals. If the process leads to a redundancy process (or a dismissal and rehire arrangement) then the collective consolation process would be triggered and the relevant process should be followed.
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working. As a furloughed employee will not be working this will be permitted.
Wages are protected and an employer may be subject to an unlawful deduction of wages claim if this is not paid.
These should continue as normal subject to agreement – an employer may reclaim 80% of an employee’s salary (subject to a cap of £2500).
This not quite clear under the guidance.
Providing the minimum periods have been adhered to (2 weeks off work – or 4 weeks if they work in a factory or workshop – immediately following the birth of their baby), it may be possible (by an employee giving the required notice or by agreement) that an employee could cut short their maternity leave and be placed on furlough leave. However, once furlough leave expires an employee will not be permitted to return to maternity leave when the furlough leave expires.
No – the employer/employee relationship will continue to be governed by the contract of employment.
If an employer is looking to place an employee on furlough leave, there should either be a contractual provision for lay off or an agreement with the employee for them to be placed on furlough leave.
Yes – the rate will be governed by the contract of employment.
It is unclear whether HMRC intends to rely on the guidance only, or whether there will be actual legislation. Please contact a member of the Employment team if you have any questions.
Please submit your information and a member of the Poole Alcock team will respond to you as soon as possible. If you have a quick question, please feel free to call 0800 389 7093