Covid 19 FAQs for Employers
Last updated 4 September 2020
Disclaimer: This document gives guidance on certain employment law and HR FAQs arising from coronavirus and the CJRS in England and Wales only. This is information but not detailed legal advice and should not be taken as such.
This set of FAQs is directed to questions employers may have. We have a separate set of FAQs directed to employees.
Government and ACAS guidance
The primary documents that we are working to when advising on Covid-19 and related matters are the various pieces of government guidance which are updated fairly regularly. Normal principles of employment law will also apply.
The various links are here:
Employer and employee guidance on coronavirus issues generally can be found here:
https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19
Guidance on the Coronavirus Job Retention Scheme (“CJRS”) also known as the furlough scheme can be found here:
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
ACAS has also given guidance on various coronavirus issues:
https://www.acas.org.uk/coronavirus
FAQ
What is the furlough scheme?
This is a reference to the Coronavirus Job Retention Scheme. It is a government initiative to reimburse up to 80% of wages for staff who can (by agreement) be laid off work or “furloughed” while the lockdown continues.
The CJRS will close on 31 October 2020. From 1 August 2020, tapering arrangements apply. From 1 September 2020, the government will pay 70% of wages (with the employer to top up any amounts to the employee) and the employer is responsible for NICs and pension contributions. From 1 October 2020, the government will pay 60% with the employer liable to top up salary, and pay NICs and pension contributions.
Can I make redundancies while staff are on furlough?
You can if it is otherwise reasonable to do so, but you should consider whether staff being on furlough can be an alterantive to redundancy.
How does notice work on furlough?
If your employees are working notice on furlough, you can claim through the scheme for this period.
This is unlikely to apply to payments in lieu of notice which should be calculated according to a contract.
What do I pay in the notice period?
For those on minimum statutory notice periods, the employer must pay 1005 of normal pay for the notice period. Because of a quirk of the Employment Rights Act, if employees' notice periods exceed minimum statutory periods by at least one week, it may be permissible to keep paying the furlough amount (e.g. 80% if this is what you have agreed).
When should I use furlough?
Government guidance says that you can access the scheme “if you cannot maintain your current workforce because your operations have been severely affected by coronavirus.”
Earlier wording referred to employees who would otherwise have been made redundant, but the current guidance seems wider than this.
Please note that the last date on which staff can be furloughed for the first time is 10 June 2020 as the scheme will be closed to new entrants from 30 June 2020.
How do I place staff on furlough?
You should not furlough staff without their consent. They will need to agree to the arrangement and the agreement to furlough should be in writing and with a copy kept by both parties. As an employer you should keep your furlough agreements so that they can be shown to HMRC in the case of an audit.
How long must a furlough be?
The furlough must last for at least three weeks. Employees may be furloughed, brought back to work and re-furloughed, so long as the three week eligibility requirement is met on each occasion.
Are staff allowed to work on furlough?
Until 1 July 2020, furloughed workers cannot do any work for their employer although they may undertake training. From 1 July 2020, employers will be able to partially furlough staff who are working reduced hours.
Staff can be casked to do trainig. Our view is that staff can be asked to participate in redundancy consultation.
What do I need to pay on furlough?
HMRC will refund employers up to 80% of workers’ (paid via PAYE) pay, up to a maximum of £2,500 gross per month. You either need to pay the excess amount on top of this to your staff (through the payroll) so that they receive normal pay, or agree with staff a temporary reduction to pay for the furlough period. Again, any such agreement should be recorded in writing with evidence of the workers’ agreement to any reduction in pay.
From 1 August 2020, employers will have to pay employee’s national insurance contributions and pension contributions (and can no longer reclaim these through the CJRS).
From 1 September 2020, the government will only reimburse 70% of salary (up to a maximum of £2,190). Employers will need to top-up employees’ salaries to 80% (or more, depending on what the employer agreed with the employee).
From 1 October 2020, the government will only reimburse 60% of salary (up to a maximum of £1,875). Employers will need to top-up employees’ salaries to 80% (or more, depending on what the employer agreed with the employee).
The government guidance sets out how pay should be calculated for various groups.
What happens to holiday on furlough?
Workers can take holiday while on furlough subject to any permission or request procedures. An employer can refuse holiday or ask staff to take holiday at a particular time by providing twice as much notice as the holiday to be taken.
Holiday pay for staff on furlough may vary. ACAS says that employees must get “usual pay in full” for holidays which implies 100% of usual salary or the usual 52 week averaging for those on variable hours. It is not completely clear what the position is if an employee has agreed a temporary reduction to salary for the furlough period - the position has not been tested in the employment tribunal as yet.
When do I have to allow staff to carry over holiday?
The government has announced a temporary amendment to the Working Time Regulations to allow workers to carry over up to four weeks’ annual leave into the next two leave years, where it is not practicable for them to take some, or all, of the holiday they are entitled to due to coronavirus.
What happens to maternity, paternity or other family pay on furlough?
The normal rules for maternity and other forms of parental leave and pay apply.
You can claim through the furlough scheme (with the same cap on reimbursement) for enhanced (earnings related) contractual pay for employees who qualify for either:
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maternity pay
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adoption pay
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paternity pay
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shared parental pay
Can you furlough staff on long term sick leave, or who are shielding or who are caring for dependants?
In principle you can furlough all of these categories of staff if the other eligibility conditions are met. There is no right for particular categories of worker to be furloughed however.
What if staff are on unpaid leave?
Staff who were on unpaid leave but were due to return during the period that this scheme runs, may be furloughed from the date that they were due to return.
What happens for those on fixed term contracts?
Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended before their natural conclusion during the furlough period without breaking the terms of the scheme. Fixed term contracts which ended, without extension or renewal, on or before 19 March 2020 will not qualify for the grant once they have ended.
What about TUPE transfers?
A new employer is eligible to claim under the CJRS in respect of the employees of a previous business transferred after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change in ownership.
Can my employees get another job if they are furloughed from our organisation?
Yes, this is permissible (subject to their contract and your agreement if required). However your employee should ensure that they are on a sufficiently short notice period in the new work that they can return to work for you when required.
Do I have to place people on furlough?
It is an employer’s decision about whether to place staff on furlough. In that sense a worker cannot “demand” to be furloughed. However, if a person is dismissed instead of being placed on furlough, a tribunal may well consider whether furlough might have been a reasonable alternative to dismissal. It may not always be, but employers should certainly consider furlough where the alternative is redundancy.