What if employees have some work but not enough? Can we ask them to work part-time? Can we use them as a self-employed contractor?
For an employer to claim the grant from HMRC under the coronavirus Job Retention Scheme in respect of a furloughed worker's salary, the Furloughed Worker cannot undertake any work for the employer, at all. Therefore, a furloughed worker can't work part-time.
Government guidance is clear that employers cannot ask Furloughed workers to undertake any work that would make money for the employer or provide services to the employer. Therefore, employers will not be able to hire Furloughed workers in another capacity, such as a self-employed contractor.
Furloughed workers can take part in volunteer work or training for their employer only.
Can we ask people to take a sabbatical or reduce their hours?
Employers can ask their employees to take a sabbatical or reduce their hours. Unless such provisions are provided for in the employee's contract of employment, for example, in a lay-off and short-time working clause, employers will need to obtain the consent of employees to do this. Consent is essential due to the fact the employer will be changing the employee's terms and conditions, and cannot do this unilaterally without risking claims for constructive unfair dismissal, breach of contract and unlawful deduction of wages.
If employers follow this route, it is advised that they consult with employees about these changes, including expected timeframes for the changes and effects this will have on their remuneration. To make the changes, without risking the claims mentioned, employers should obtain the employee's written consent to the changes before taking any action.
Requesting employees take a sabbatical or reduce their hours is an alternative to using the coronavirus Job Retention Scheme. Employees can only be designated furloughed workers, allowing their employer to benefit under the scheme by obtaining a grant from HMRC if they cease all work for their employer. Therefore, it cannot be used alongside sabbaticals or a reduction in hours.
We have some employees who have been furloughed, and we think they may still be working, do we have to stop them? If so, how?
If employees who have been designated as furloughed workers continue to undertake work for their employer, this may jeopardise the validity of the employer's claim under the coronavirus Job Retention Scheme. If HMRC becomes aware of such work, the employer's claim is likely to be found to be fraudulent, and the employer will not be able to receive the grant in respect of such an employee. The employer may also face fines for making fraudulent claims if they are aware of the employee undertaking such work.
Therefore, it is advised that employers stop employees from undertaking any form of work. Employers should make it crystal clear to all furloughed workers that they are not to undertake any work for their employer during their period of furlough, including even minor actions such as replying to or even forwarding on an email.
If the employer is concerned about some employees continuing to work, it may wish to consider blocking the employee's access to emails or work-related information in an attempt to prevent any work being undertaken.
What if the employee has a secondary income from their own business or a second job? Can we still apply to the scheme?
The coronavirus Job Retention Scheme treats each job separately. Therefore, if you have an employee who works either for other employers or for themselves, this will not prevent you from placing them on furlough. The employee can be furloughed in respect of each employment (and may be able to seek support under the self-employed income support scheme in respect of any self-employment).
Each employer is entitled to furlough the employee irrespective of whether they are furloughed for their other job(s) or whether they continue to work for another employer/ themselves. The cap of £2,500 per month will apply independently to each of the employee's employers – i.e. your employee having other employment will in no way affect the claim you can make for them under the scheme.
What if an employee refuses to be furloughed can we make them redundant?
An employer cannot furlough an employee without their written consent to changing their status from employee to furloughed worker and their agreement to cease all work for the employer. If the employee will not consent to furlough, and the employer cannot sustain the employee in work, the employer can consider making the employee redundant.
The ordinary redundancy process should be followed in this situation to ensure that the employer minimises the risk of an unfair dismissal claim being made by the employee. If 20 or more employees refuse to be furloughed, and thus the company is considering 20 or more redundancies, collective consultation obligations will arise.
Can employers backdate the furlough period to 1 March for all employees, even those who have been working since then?
The coronavirus Job Retention Scheme allows employers to backdate claims to 1 March 2020. Unfortunately, if employees have continued to work for the employer since 1 March 2020, they cannot be furloughed back to this date. Employers are only able to backdate an employee's furlough to the day the employee ceased working for them – e.g. if the employee's final day of work for the employer was 10 March 2020, the employee can be furloughed from 11 March 2020.
How do employers claim employees under the coronavirus Job Retention scheme? Can they make one claim for all employees, or do they have to be separate?
Employers will make claims through the HMRC portal. The portal has been up and running since Monday, 20 April 2020. HMRC confirmed to a Parliamentary Select Committee that it hopes to make the first payments by 30 April 2020.
To make a claim, employers will need the following information:
- Their PAYE reference number;
- The number of employees being designated as furloughed workers;
- National insurance numbers for the employees being furloughed;
- Names of the employees being furloughed;
- Payroll/works numbers for the employees being furloughed;
- Their self-assessment unique taxpayer reference or corporation tax unique taxpayer reference or company registration number;
- The claim period (start and end date);
- The amount being claimed (per the minimum length of furloughing of 3 consecutive weeks);
- Their bank account number and sort code;
- Their contact name; and
- Their phone number.
If an employer is claiming for fewer than 100 furloughed workers, they will be required to process the details of each employee directly. However, an employer claiming for 100 or more Furloughed workers will be asked to upload a file containing the relevant information (i.e. name, national insurance number, claim period, claim amount and payroll number for each employee). Whichever means is used, the employer must retain the data used to make such calculations in respect of claims.
The payments for furloughed employees, are they a grant or a loan?
Government guidance has confirmed that employers will be able to receive a grant from HMRC, not a loan and is therefore not repayable. This grant will cover 80% of the Furloughed Workers' usual monthly wages (up to a maximum of £2,500).
Do we still need to pay national insurance, benefits packages and pension contributions for furloughed employees?
In short, yes. Furloughed workers remain on the company's payroll. They will continue to be subject to the same terms and conditions of employment as when they were working, save for their obligation to undertake work and right to receive full pay.
Employer's national insurance contributions and employer's pension contributions will be based on the furloughed salary (i.e. the salary agreed between the employer and employee for the period of furlough) for the period of furlough. The employer is entitled to claim back national insurance contribution's and the employer's minimum auto-enrolment pension contributions on the 80% of the furloughed worker's salary (up to the cap of £2,500 per month) that it is receiving as a grant from HMRC. Therefore, if the employer has agreed with the employee only to pay 80% of their salary (up to the maximum of £2,500 per month) and the employee is only contractually entitled to the minimum auto-enrolment pension contribution from the employer, the employer will not bear any pension or national insurance contribution costs.
However, if the employer is paying furloughed worker's more than this (i.e. the employer is topping up the furloughed worker's salary), they will be accountable for paying any differences in the contributions. Furthermore, if the employer contributes more than 3% into their employee pensions, they will be accountable to make up this difference.
Do employers have to pay their furloughed employees and claim the money back later?
The coronavirus Job Retention Scheme does not impact on the employer's duty to pay furloughed workers. Therefore, the employer must continue to pay furloughed workers following the usual pay periods (albeit a reduced salary if this has been agreed). The employer will then be able to reclaim 80% (up to a maximum of £2,500 per month) in respect of each Furloughed Worker back from HMRC under the scheme.
Can an employer delay paying their furloughed employees?
The coronavirus Job Retention Scheme does not impact on the employer's duty to pay furloughed workers. Therefore, the employer must continue to pay furloughed workers following the usual pay periods (albeit a reduced salary if this has been agreed), i.e. they cannot just delay paying furloughed workers.
Because the HRMC portal has only just been launched, this may cause cash flow issues for some employers. Employers have the option to consult with furloughed workers and obtain their written consent to payments being deferred. However, if the employer does not obtain such permission, the furloughed workers must continue to be paid on time or the employer risks claims for constructive unfair dismissal, breach of contract and/or unlawful deduction of wages.
What happens if the employer claims 80%, but the employee continues working? How will it be enforced?
If employees who have been designated as furloughed workers continue to undertake work for their employer, this may jeopardise the validity of the employer's claim under the coronavirus Job Retention Scheme. If HMRC becomes aware of such work, the employer's claim is likely to be found to be fraudulent, and the employer will not be able to receive the grant in respect of such an employee. The employer may also face fines for making fraudulent claims.
It is not yet clear how HMRC will consider claims and what investigation they will take into determining whether employees have undertaken work for their employers during a period of furlough. However, it is advised that employers make every effort to stop employees working so that if detailed investigations are undertaken, employers have minimised the risk of their claims being rejected or found to be fraudulent.
Can furloughed employees' cash in annual leave to top up their 80% salary pay?
Employees must be provided with at least the minimum holiday entitlement of 28 days, which can include the eight bank holidays in England and Wales.
While taking this into account, employees can sell some additional annual leave which is over and above the statutory entitlement back to their employer. Whether or not an employee can do this will depend on their contract of employment and/or agreements with their employer. However, often, the action of selling annual leave cannot be done part-way through the holiday year.
It is therefore up to employers whether they will allow employees who are placed on furlough to sell some annual leave back to the company (while of course complying with the statutory minimum at all times). If employers do allow this, they will need to agree with the employee when payments will be made to the employee in respect of these sold days. Often, payments in respect of sold annual leave are made proportionately throughout the year, not in one go to the employee.
It is important to note that these payments for sold annual leave are separate to Furlough payments and so will not be a "top-up" up to Furlough salary. They will simply be a payment in respect of the annual leave the Furloughed Worker has sold. It should also be noted that employers will need to consider if they allow non-Furloughed employees to do the same, as otherwise, employers may risk discrimination claims arising from differences in treatment.
Can employers insist furloughed employees use their annual leave during the furlough?
It appears that, as with other employees, employers can force furloughed workers to take annual leave while on furlough without this affecting their claim under the coronavirus Job Retention Scheme.
Employers will need to comply with their usual obligations of providing employees at least twice the amount of notice than the amount of holiday they require the furloughed worker to take. For example, if the employer wants the furloughed worker to take two days holiday, the furloughed worker must be given four days' notice. Still, if the employer wants the furloughed worker to take one week's holiday, they must be given two weeks' notice.
We are awaiting Government guidance to confirm this point.
Do employers have to pay full annual leave pay if the annual leave is taken during a furlough period?
It appears that furloughed workers who take annual leave during a period of furlough must continue to be paid their full salary for such days, at least for the statutory minimum of 20 days, and quite possibly also the eight recognised bank holidays in England.
This suggests that employers will be required to make up any difference in salary on any days furloughed workers take annual leave. For example, if the furloughed worker has agreed only to be paid 80% of their salary (up to a maximum of £2,500) as this is what their employer can claim back from HMRC. The employer would need to pay top-up the salary to full pay for any days the Furloughed workers takes as annual leave.
We are awaiting Government guidance to confirm this point.
Can employers put an employee who is absent due to illness on furlough instead of statutory sick pay?
Government guidance makes clear that the coronavirus Job Retention Scheme is not intended to be applied to those who are absent from work due to short-term illness. This is why the scheme has a three consecutive week minimum period for employers to be able to claim grants from HMRC.
This being said, an employer can place an individual who is absent from work due to illness or self-isolation on furlough if they choose, provided they have genuine business reasons for doing so. If the employer moves the employee onto furlough, they must be designated a furloughed worker and can no longer receive statutory sick pay or company sick pay if applicable, but will instead be entitled to 80% of salary up to the £2,500 cap.
Some employees on long-term sick leave may be "shielding" in line with government guidance. Any individual who is shielding is eligible to be furloughed.
What happens to employees on maternity or paternity leave, can we furlough them?
Statutory payments due to any individual on maternity leave will not be impacted by the scheme - Government guidance states the "normal rules" apply here. This suggests that an individual on maternity leave (or a similar type of leave) receiving statutory maternity pay (or the equivalent statutory pay for a similar type of leave) cannot be furloughed. At the same time, they remain on such a period of leave. Of course, an individual has the choice to return to work early from maternity leave (provided they have taken at least two weeks off (4 weeks off if they work in a factory or workshop) and will then be eligible for furlough.
However, Government guidance notes that employers can claim through the coronavirus Job Retention Scheme for enhanced (earnings-related) contractual pay in respect for certain types of family leave, which suggests where employers make payments above the statutory amounts, they will be able to claim for this through the scheme. However, there is yet to be clarification on what this means.
Employees who have children being home-schooled, can we furlough them because they can't complete their contracted hours, or should we reduce their contracted hours?
Employers can reduce the hours of those that have child-care responsibilities to allow them more time away from work to care for children. However, unless the employee has a short-time working and lay-off clause in their contract of employment, the employer will need to consult with the employee about this reduction in hours (and consequent reduction in pay) and obtain their written consent before making the change.
Alternatively, employers are entitled to use the coronavirus Job Retention Scheme to furlough an employee who has caring responsibilities resulting from coronavirus (e.g. needs to look after their children who can no longer attend school), and is thus unable to work.
Can we furlough employees who are on sick leave due to having the symptoms of coronavirus?
Government guidance makes clear that the coronavirus Job Retention Scheme is not intended to be applied to those who are absent from work due to short-term illness/ in self-isolation. This is why the scheme has a three consecutive week minimum period for employers to be able to claim grants from HMRC.
This being said, an employer can place an individual who is absent from work due to illness or self-isolation on furlough if they choose to do so, provided they have genuine business reasons for doing so. If the employer moves the employee onto furlough, they must be designated a furloughed worker and can no longer receive statutory sick pay or company sick pay if applicable, but will instead be entitled to 80% of salary up to the £2,500 cap.
Can employers place new employees on furlough immediately?
The coronavirus Job Retention Scheme only allows employees who were on the employer's PAYE payroll system, and who HMRC was informed about through an RTI submission, on or before 19 March 2020. Previous government guidance had the "cut-off" date as 28 February 2020, but this has now been extended.
Any employees who were employed after the 19 March 2020, or who were employed before but not added to the employer's PAYE payroll and notified to HMRC, will not be eligible to be furloughed under the scheme.
Please note there are a few exceptional cases:
- Those employees who had their employment TUPE transferred across to a new employer under the Transfer of Undertakings (Protection of Employment) Regulations can still be placed on furlough, despite the transfer occurring after 19 March 2020 if either the TUPE or PAYE business succession rules apply to the change of ownership;
- Where a group of companies consolidates it PAYE scheme and moves all employees under this new consolidated PAYE scheme after 19 March 2020, such transferred employees can still be furloughed; and
- If an employee has been made redundant, provided they were on their employer's PAYE payroll system as of 28 February 2020 and made redundant prior to 19 March 2020, they can be furloughed if their employer re-hires them. Such employees can be furloughed regardless of whether they are re-hired before or after 19 March 2020.
Does the Job Retention Scheme cover zero-hours contract employees? How are their payments calculated?
Yes, the coronavirus Job Retention Scheme does cover employees on zero-hour contracts, provide the employee is paid via the employer's PAYE payroll system, and HMRC has been notified of the employee through an RTI submission.
As the salary of individuals on zero-hour contracts varies, the 80% payment is calculated based on the higher of:
The earnings in the same pay period in the previous year; or
- The average earnings in the previous 12 months (or less, if they have been employed for less than 12 months).
- Does the coronavirus Job Retention Scheme cover migrant workers?)
The coronavirus Job Retention Scheme applies to Foreign nationals, meaning that they can also be furloughed. It has been made clear in Government guidance that the grants provided by HMRC under the scheme will not be counted as "access to public funds". So employees on all categories of visa can be furloughed providing they are working for a United Kingdom-based business, with a PAYE payroll scheme that was operating by 28 February 2020, have enrolled for PAYE online and have a UK bank account.
What if an employee has already been dismissed; should they be reinstated to get the furlough salary?
Employees who have been made redundant or dismissed for any reason relating to coronavirus can be re-hired by their employer. If such employees were on the employer's payroll as of 28 February 2020 and made redundant or dismissed for a coronavirus related reason prior to 19 March 2020, the employee can be re-hired and then placed on furlough. It does not matter if the employee is re-hired prior to 19 March 2020 or after this date.
However, if the employee who is now redundant was not on the payroll as of 28 February 2020, they can not be placed on furlough. Therefore, those added to the payroll between 29 February 2020 and 19 March 2020, who was subsequently made redundant or dismissed cannot be re-hired to be placed on furlough. Furthermore, those that were made redundant or dismissed after 19 March 2020 can not be re-hired to be placed on furlough.
If an employee technically can be re-hired to be then furloughed, whether this actually occurs is a decision for the employer. If the dismissal or redundancy was a result of coronavirus, then it is likely to be deemed fair for the employee to be re-hired to benefit from the scheme. However, if they left the company for a completely different reason, the employer could face questions surrounding the validity of their claim under the scheme in respect of such an employee if they re-hire and furlough.
If furloughed employees do not book any annual leave, does holiday leave accrue? Or is it cancelled because they are already off work?
Furloughed workers remain employed on their employer's payroll and continue to be subject to the same terms and conditions of employment as when they were working, save for their obligation to perform work and right to receive full pay. Therefore, their holiday will continue to accrue, regardless of whether they take any annual leave or not during their period of furlough.
What happens to workers who have been unable to take their annual leave entitlement because they have been needed to work?
Usually, an employer has a duty to make sure all employees take the statutory minimum holiday entitlement in each holiday year. This equates to a minimum of 28 days, which can include the eight bank holidays in England.
However, in light of the coronavirus pandemic, the working time regulations have been amended to provide employers with the flexibility to allow employees to carry over up to 20 days holiday entitlement from this holiday year into the next two holiday years if they have not been able to take their annual leave due to coronavirus. This will help ease the burden on employers to ensure all employee take annual leave when this is likely to be difficult in some areas of work which cannot afford to be left short-staffed in the midst of the outbreak.
What if employers want to bring employees back from furlough early (because other people get sick)? Do they lose the ability to claim three weeks of 80% and need to increase their pay for those weeks?
For an employer to claim under the coronavirus Job Retention Scheme in respect of a furloughed worker, this individual must have been on furlough for a minimum of 3 consecutive weeks. If an employee is on furlough for less than this (e.g. two weeks and two days), the employer will not be able to claim for this period.
Employers can bring furloughed workers off furlough at any point. It is advised that employers provide Furloughed workers with reasonable notice to do this, e.g. a day or two. However, if employers do end the furlough before an employee has been furloughed for at least three consecutive weeks, employers cannot claim for this period in respect of the employee.
If an employer decides it is necessary to bring employee's back before this three-week minimum, it seems likely that the employer will have to pay the employee their full salary. The employee will be treated as not furloughed and so entitled to their usual remuneration still for the whole period.
Even though the employee may have consented to a reduction in salary, this is likely to have only been in the context of being furloughed. Therefore, if they are not deemed to have been furloughed, the employer is likely to struggle to argue against paying a full salary for the whole period, which is discounted.
Do employers have to give the employee the full amount received as a grant from HMRC?
Yes, employers must pay the employee the full grant received for their gross pay, paid in the form of money. Employers are not entitled to enter into any form of transaction to reduce the wages, such as an administration charge or a charge for employment costs.
What if paying 80% of an employee's salary will then them under the national minimum wage?
Individuals are only entitled to receive the national minimum wage ("NMW") for the hours that they work. As a result, if they are designated as furloughed workers, and 80% of their salary takes them below the national minimum wage, this is not a breach of the rules as the employee is not working. The employer is, therefore, not required to ensure the national minimum wage is received.
The employees are, however, entitled to be paid the national minimum wage for any time spent training.
Can employers furlough an employee and then hire them to work in another company?
Government guidance states that employees designated as Furloughed workers cannot make money or provide services for their employer or any organisation linked to or associated with their employer. Therefore, it would appear that employers are not able to furlough employees from one company to hire them in an associated company.
Can employees work for another employer while furloughed?
Provided employees are contractually allowed to work for another employer; they can start a new job for another employer while on furlough. We did not think this would be permitted, but the Government has confirmed this is acceptable. If you take on a new employee, you should ensure that you complete the starter checklist form correctly. If the employee you take on is currently furloughed from other employment, they should complete Statement C to indicate they have two employers.
What if an employee who is on furlough becomes sick? Does this break the period of furlough?
Furloughed workers will continue to be entitled to their statutory rights during any period of furlough. Therefore, Furloughed workers are entitled to receive at least statutory sick pay for any periods of sickness absence.
If a furloughed worker becomes sick during the period of furlough, the employer can decide whether to:
- Move the furloughed worker onto statutory sick pay (or company sick pay if applicable); or
- To keep the furloughed worker on furlough and pay them at their designated furloughed rate.
If the employer moves the furloughed worker onto statutory sick pay, the employer must bear this cost themselves (although the employer may be eligible to obtain a rebate of two weeks statutory sick pay). If a furloughed worker is moved onto statutory sick pay, the employer can no longer claim under the Job Retention Scheme for the aforementioned employee's furloughed salary. Alternatively, if the employer keeps the sick Furloughed workers on furlough, the employer will remain entitled to claim for such costs (i.e. the employee's furloughed rate through the coronavirus Job Retention Scheme).