1. What is a furloughed worker?

A “furloughed worker” is an individual who is sent home when there is not enough work to do. Essentially, this is when an employer requires their staff to take unpaid leaves of absence. A furloughed worker remains an employee during this time but will not be undertaking work for their employer.

However, under the Coronavirus Job Retention Scheme, the government has pledged to cover 80% of furloughed workers’ salaries up to a cap of £2,500 a month, which the employer can claim as a grant.

2. How much are employees entitled to under the scheme?

The reimbursement is 80% of a worker’s wage costs up to a maximum cap of £2,500 per month, plus employer’s National Insurance contributions and the minimum auto-enrolment employer pension contributions. This is calculated on the wage the employee receives but excluding bonuses and commission (which can be topped-up by the employer if they wish, however there is no compulsion on this, see question 15 below).

3. Does the money have to be paid back?

The Coronavirus Job Retention Scheme entitles employers to claim a grant from HMRC and therefore it does not need to be paid back.

4. When will employees get paid?

HMRC are urgently working to set up the new reimbursement system, and the government intends that the scheme will be operational by the end of April 2020. This will therefore be when the first grants are made. Employers will however be able to backdate an individual’s pay to 1 March 2020.

5. What is the difference between being furloughed and laid off?

In both cases the employee will not be undertaking any work for the employer for a period of time, but their employment will be continuing. The main difference is that a furloughed worker continues to be paid during this period.

6. Why do companies furlough?

Given these unprecedented times, many businesses may not have enough work for their staff and would therefore struggle financially to continue paying them their full wages. The Coronavirus Job Retention Scheme therefore helps to ensure that staff who would otherwise be laid-off with no pay or made redundant retain their jobs and provides support so that they continue to receive pay.

7. Who is eligible for the scheme?

The guidance for employees in relation to the scheme states that an individual must have been on an employer’s PAYE payroll by 28 February 2020. New recruits entered onto the payroll after this date are therefore not covered by the scheme.

The scheme also covers employees on zero-hour contracts. However, it will not cover individuals on zero-hour contracts who are classified as falling into the intermediate employment status category of a “worker”. The intention of the scheme seems to be that only employees will be covered, and so casual workers will therefore not receive support. As a result of workers not receiving support, we may expect to see an increase in claims and complaints by individuals regarding employment status, and this is an issue that employers need to be mindful of.

Employers should also be aware that if they are claiming under the scheme to receive the reimbursement, this could be taken as evidence that they accept their casual workforce are employees. If you would like further guidance in relation to employment status and your workforce, please contact a member of our team.

8. How do you register a furlough worker?

Employers need to submit information to HMRC about staff who have been furloughed and their earnings, via an online HMRC online portal which is in production and it is anticipated will be operational at the end of April.

9. Can employees put themselves on furlough?

No, employers need to designate the staff as furloughed.

10. What if an employer refuses to put employees on furlough?

Employers are also not under an obligation to place employees on furlough. It might be that all or some of the roles can still be performed, in which case not all employees will be furloughed. In these cases, the employer should adopt a fair selection criteria for determining which employees, if any, will go onto furlough, which may involve initially asking for volunteers.

11. Can employees work while they are furloughed?

Employees will not be able to do any work for their employer during this time. It is therefore important for employers to appreciate that they cannot call on furloughed employees if they need them to do some work.

Furloughed employees can however undertake volunteering and training, provided they are not: • Making money for their employer • Providing services to their employer Under schedule 7 of the newly enacted Coronavirus Act 2020, employees now have an entitlement to emergency volunteering leave. This is limited only to supporting the NHS and health services “as an emergency volunteer in health or social care”.

An employer would not be able to furlough employees and request that they then volunteer to complete work for them – i.e. you can’t volunteer for your same employer.

12. How long can an employee be on furlough leave?

Any furlough leave must be a minimum of three weeks but could be as long as the current three month period set down by the Government.

13. Can employees who are self-isolating be furloughed?

Employees who are on sick leave or self-isolating should be on statutory sick pay. They can however be furloughed after this, but not at the same time.

However, employees who are following general guidance and “social distancing” following the UK lockdown, including those doing so because they fall within a ‘vulnerable’ group, can be placed on furlough. It is therefore important to distinguish between those who are self-isolating and those who are social distancing.

14. What about employees who have more than one employer?

An employee can be put on furlough by one employer and continue to work for another, provided this is permitted by their contract of employment.

An employee can also be put on furlough leave by more than one employer. In these circumstances, they will receive separate payments from each employer and the 80% of their normal wage up to the cap of £2,500 a month applies to each job.

15. What about bonuses and commission?

It is explicit that employers cannot reclaim fees, bonus or commission payments under the scheme.

It does appear that overtime, allowances and premiums can be recovered in line with the scheme rules.

Under the scheme, employers are not obliged to top up the remaining 20% of the employee’s wages. However, if they decide to top-up and so can include commission and bonuses, then anything included in the top-up cannot be reclaimed from the government.

16. Do you need consent to put an employee on furlough leave?

Although it is unlikely that employers would need consent of their employees if they are topping-up the wages to 100%, it would still be advisable as a measure of precaution for employers to obtain employee consent to being furloughed in such cases.

If you are paying only the 80% then this would be a change to terms and conditions and you would need consent to this change. In such cases, if you are only going to introduce furlough if employees agree to the change then this should not trigger the collective consultation obligations. However, if not enough employees consent to the change, you then plan to either impose the change or make redundancies instead, the collective consultation obligations may be triggered. Specific legal advice should be obtained should this be relevant to your circumstances.

In practice, we think employees are likely to accept furloughed status. For most, it will be a more desirable outcome than a redundancy situation.

17. What about staff with variable hours?

For staff who work variable hours, employers can claim under the scheme either for the pay paid in the corresponding month last year or the average earnings for the previous 12 months. If they haven’t worked all year, then on the basis of their average earning to date.

18. Can an employer rotate staff on furlough leave?

An employer is able to rotate staff on furlough leave provided each period of leave is 3 weeks. An employee is also able to have more than one period of furlough leave, provided again each period of furlough leave lasts for 3 weeks.

19. Can an employee take holiday whilst on furlough?

Provided that twice as much notice as the holiday to be taken is given then it is likely that an employee will be able to take holiday whilst on furlough.

However, a question arises as to how much that individual should be paid because employees must receive their normal pay when on holiday which can include overtime, bonuses and commission payments provided these are sufficiently regular so as to count as normal renumeration. Whilst on furlough leave, an employee could be receiving a minimum of 80% of their wages capped at £2,500 a month which, as stated previously, does not include bonus or commission payments. It could therefore be that the employer will need to top-up the employees’ wages during the time they take as holiday.

20. Will putting an employee on furlough affect their EMI options?

Under the Coronavirus Job Retention Scheme, employees on furlough leave may technically not be working the minimum work requirements under the EMI legislation. This could therefore be a “disqualifying event” resulting in the loss of the tax advantages of EMI options.

We understand that HMRC have been made aware of this and we are hoping they will publish a concession similar to that granted to armed forces reservists who are called up. In the meantime, our advice is that it is safer not to furlough such employees if you want to ensure their options remain unchanged.

We will continue to monitor the situation.

Further advice If you would like further guidance in relation to the Coronavirus Job Retention Scheme, please do contact a member of the Employment team.

Further guidance from the government on The Coronavirus Job Retention Scheme: