Coronavirus Job Retention Scheme – furlough

Coronavirus Job Retention Scheme – furlough

The Coronavirus Job Retention Scheme has been put in place by government to prevent redundancies. Brenda Roper of B&D Roper Ltd explains how furlough, a key element of the scheme, works in practice.

This scheme has been put in place by the government to prevent redundancies.  If you are tempted to make employees redundant please remember that redundancy is about jobs and not people and that it pertains to jobs you no longer need – not jobs that you do not need now but will need again once this crisis is over and life returns to something close to normality.

How furlough works

Furlough only applies to employees and specifically those employees that were on your PAYE payroll as at 29th February.  There is no indication that is applies to workers.

Furlough represents a change to an employees terms and conditions of employment and so can only be implemented with the agreement of the employee.   I can provide a template agreement for you to use.

The government will pay the employer 80% of each furloughed employees wages up to a maximum of £2,500 per month per employee.  The government will also pay the associated employer costs of NIC and the minimum auto-enrolment pension contributions on that wage.  Fees, commission and bonuses are not included.

The employee will receive 80% of their normal wage up to a maximum of £2,500 a month which is subject to tax and NI.  The employer is not obliged to make up the remaining 20% although, of course, may choose to do so.

Implementing furlough

Furlough must be implemented in minimum blocks of 3 weeks.  You can rotate furlough between employees provided you have each employee on a minimum furlough of 3 weeks.  So, you cannot set up a rota of one week on furlough and one week off furlough.  You may wish to consider staggering the implementation of furlough so you can bring your employees back piecemeal when the crisis of over.

During furlough the employee must not work for you.  If they work even for an hour they are not eligible.  However, they are able to undertake training and do volunteer work provided they do not provide services to or make any money for their employer.

If you have to choose who to furlough and who not to furlough, you will need selection criteria in the same way as you need selection criteria for redundancy.  Please make sure your selection criteria are not discriminatory – I’m here to help if you are not sure how to do it.

If employees are sick during a period of furlough they should be paid SSP for the period of sickness in the same way as if they were in work.

Employees can take annual leave during a period of furlough but, according to current case law, you would need to pay the full 100% of wages during the period of annual leave.

Need help or a furlough template? 

Phone 01428 654990 or 07766 167160 or email brenda.davidroper@btinternet.com

 

 

 

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