Pattinson & Brewer Solicitors
Coronavirus National Crisis – Furlough Leave Updates
As of 27 March 2020, the Government has communicated further details in respect of the Coronavirus Job Retention Scheme. The update provides more clarity around the issues of what remuneration qualifies as ‘wages’, how long furlough lasts and what the position is if an employee is self-isolating.
Which organisations can furlough employees?
The scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020. This includes charities, recruitment agencies and public authorities; however, whilst the scheme is open to employer’s in the public sector, whilst public sector employees are still being paid wages in the normal way it is not expected that they will be furloughed.
Crucially, the scheme covers agency workers, those on a zero hours contract and if an employee was made redundant after 28 February 2020, their employer can choose to re-hire them and furlough them instead.
How are ‘wages’ calculated?
Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month plus the associated employer NICs and minimum auto-enrolment pension contributions on that wage. Important to note is that fees, commissions and bonuses are not included.
Full and part-time employees
Your employer can use your actual salary before tax as at 28 February to calculate the 80%, or simply apply up to the £2,500 cap.
Employees with fluctuating pay i.e. zero hours contracts
If you have been employed for more than 12 months prior to 28 February employers can use either:
- the same month’s earning from the previous year
- average monthly earnings from the 2019-20 tax year
If you have been employed for less than a year, your employer can use your average monthly earnings since you started working for them.
If you only started in February 2020 your employer can pro-rata your earnings so far to calculate your wage.
National Minimum Wage
Individuals are only entitled to National Minimum Wage (NMW) for the hours they work. Therefore, if an employee is placed on furlough leave and the 80% calculation drops them below the NMW they will still only receive the 80% pay as they are not considered working. If there are any periods of training, this can be paid at NMW.
Employers must furlough their employees for a minimum of three consecutive weeks. It seems that an employer could choose to rotate its staff from being on furlough leave and off, but it must ensure that each employee is to take furlough leave in a block of three weeks.
An employee can undertake voluntary work or training, but an employee must not provide services or make money for their employer.
Employees who are off sick or self-isolating cannot be furloughed, however once they are no longer sick or isolating they can be considered for furlough leave. Employees who are shielding themselves as per government guidance (those who are in the high risk/vulnerable category) can be placed on furlough leave. Please see our previous blog [Coronavirus National Crisis – Employee Rights] about your rights should you need to take some time off work due to the outbreak.
If you require advice in relation to the above please contact our free helpline on: 01904 528 310.
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