In order to maintain their workforce, employers can claim a grant from HMRC to pay 80% of the salaries of employees who are furloughed, ie still on payroll but temporarily not working during the coronavirus outbreak. Here, we address some of your pressing concerns about the scheme.

What is covered by the scheme?

“Employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) employer National Insurance contributions and minimum auto-enrolment pension contributions,” says Edwina Redhead, HR consultant at NatWest Mentor. Commissions, discretionary bonuses and benefit-in-kind payments, such as private health insurance or company car payments, are not included; however, compulsory commission payments and fees are included.

Will employers need to top this up, ie pay the other 20% to the employee?

“Under the terms of their employment contract, the employer should be paying them 100% of wages, with 80% made up by the government,” says Redhead. “Employers who can’t afford to do that need to consult with staff to try to agree to a temporary reduction of pay to 80%. Where larger numbers of staff are involved, ie more than 20, employers should be aware of any collective consultation requirement, and take some legal advice to ensure they meet those requirements.” 

How long will the scheme last?

Launched in March, the scheme has now been extended until the end of October. The chancellor, Rishi Sunak, has pledged that furloughed staff will continue to receive 80% of their current salary, up to £2,500 a month, and the scheme will continue in its present form until the end of July.

From August, the government plans to introduce more flexibility, to support the transition back to work, and furloughed workers will be able to return to work part-time. Employers will be asked to pay a percentage towards the salaries of their furloughed staff – full details on this are due to be announced by the government at the end of this month (May). 

How can employers afford to pay staff in the meantime?

“A lot of the questions we are being asked are around cash flow and what options employers have to pay people until they receive the CJRS grant,” notes Redhead. “These include looking at zero-interest loans that are available through the Coronavirus Business Interruption Loan Scheme, as well as overdraft options. Failing that, employers could speak to staff and seek written agreement from them to defer payment until the grant comes through.”

Which employees will be eligible for furlough leave?

All staff who are PAYE (pay as you earn) and have been on company payroll since at least 19 March 2020 are eligible, so long as their employer has notified HMRC and made a real time information (RTI) submission on or before that date. Full-time, part-time, temporary, zero hours, apprentices and fixed-term staff can all be included as long as they are PAYE. Office holders, including directors, salaried members of LLPs (limited liability partnerships), agency workers and those who fall into the employment status category of ‘worker’ can also be included.

Can employees whose salaries are funded by public bodies be furloughed?

“Where employers receive public funding for staff costs, the government expects employers to use that money to continue to pay staff rather than furloughing them,” says Redhead. This also applies to non-public-sector employers who receive public funding for staff costs.

How does the scheme affect employees who are staying at home due to school closures?

Redhead says that employees who are unable to work because they have caring responsibilities resulting from coronavirus can be furloughed. “Employers can also claim for furloughed employees who are shielding (and not sick), in line with public health guidance, or who need to stay at home with someone who is shielding, if they are unable to work from home and they would otherwise have to make them redundant.”

Can a furloughed employee still work for their employer?

While they are on furlough leave, an employee cannot undertake any work for the same employer. They can undertake online training, however, in which case they must be paid at least the minimum wage for the time they are carrying out the training.

Is it possible to furlough just one or two employees and keep everyone else working?

“Yes, and it is also possible to rotate employees,” says Nicky Goringe Larkin, founder and managing director of Goringe Accountants. “For example, an employer may decide to employ certain employees for one month and rotate to using other employees for the next. But it must always be for a minimum of three weeks in order for the employer to claim the grant.”

Can furloughed employees take another job?

Redhead says: “Furloughed employees could work for another business and be paid for that, subject to HR approval and providing that their employment contract gives them permission to do so. If you do permit your employees to take on additional work during their usual working hours, it needs to be made clear to them that they must be available to resume their duties if work becomes available again.”

What if employees refuse furlough leave?

“If an employee refuses furlough leave, the employer will have to decide on any other options available and this will entirely depend on the contract with the employee,” says Goringe Larkin. “For example, some employers may be able to decrease the employee’s hours of work, agree that they take annual leave, or even make the employee redundant.”

What if an employee wants to be placed on furlough leave, but employers want to retain them as normal?

Although employees can volunteer to be furloughed, their employer is not obliged to accept this. It is the employer’s decision whether they are furloughed or not.

If an employer has already made staff redundant, can they reverse this decision and place them on furlough leave instead?

If a business has made an employee redundant since 1 March, they can reverse that and place them on furlough leave instead and claim the CJRS grant.

“One point to make is that if someone is made redundant and the employer then rehires them, it seems fair to ask them to repay their redundancy pay,” says Redhead. “However, the government has given no details of whether this is required or how this is expected to work in practice. These employees would qualify for redundancy pay again if they were to be made redundant in the future.”