Coronavirus Job Retention Scheme (Furlough) – FAQs – Latest update 29th June 2020

SYLO Associates can support and provide advice and guidance on the Coronavirus Job Retention Scheme and can help you to navigate through the process and provide the necessary templates for your use.

Full guidance was issued on 26 March 2020, and subsequently updated on 2nd and 9th April 2020.  These are some of the FAQs we anticipate both you and your employees may ask.

We are, of course, continuing to decipher the detail of the guidance and we will issue updates and additional documents regularly.

The Chancellor announced a new package of financial measures on Friday 20 March 2020 and detailed guidance was issued on 26 March 2020. These measures represent an unprecedented level of financial support to business and employees at this difficult time; albeit subject to an initial period of three-months.

This is a scheme that will allow all UK employers to access financial support to continue paying part of their employee’s salary (up to 80%) for those who would otherwise have been laid off/made redundant as a consequence of the Coronavirus pandemic.

The Government has now published detailed guidance on how the scheme will work and this note summarises the main points.

The full guidance for employer’s is available here.

Guidance for employee’s is available here.


Frequently Asked Questions

Q: What is furlough leave?

The Government have introduced furlough leave to be used in circumstances where the employer cannot continue to operate and generate revenue as it normally would and, therefore, does not have work for their employees.  In normal circumstances, this would result in employees being laid-off or being made redundant. The Coronavirus Job Retention Scheme introduces furlough leave as an alternative to lay-off or redundancy.

Q: What date can we claim furloughed staff wages from?

From the date the employee was sent home.

Q: What can I do during furlough leave?

During the furlough period, you will:

  • continue to be employed by your current employer;
  • not be allowed to carry out any work for your current employer (this applies up to 30th June after which time the scheme will be more flexible and allow employees to return part-time);
  • continue to receive 80% of your monthly wage (subject to the usual tax, NI, and pension deductions and at the reduced salary rate where this applies) on the usual pay date.
  • continue to accrue annual leave and other contractual benefits;
  • you will be provided with a specified number of days’ notice for you to return to work and end furlough leave.

Other terms and conditions of employment and length of service will not be affected during this period, including your continuous service date.

Although you are not permitted to carry out work for your employer or any associated employer, you may undertake voluntary work.  The Government are seeking volunteers to support the NHS and you can volunteer if you are fit and well and not in a high-risk group.  The link to register to volunteer is here.

You may also consider spending time on your personal development.  There are some excellent free courses available through The Open University and Reed.co.uk.

Q: What pay and benefits will I receive on furlough leave?

You will receive 80% of your usual base pay, capped at a maximum of £2,500 per month.  This will be subject to employee tax, national insurance pension deductions.  The Government Scheme enables employers to reclaim 80% of all furloughed workers pay.

You will also continue to receive your contractual benefits as if you are working and you will accrue annual leave at your standard rate.

Q: What is the timeframe

The Governments Coronavirus Job Retention Scheme will run for 8 months in total, ending on 31st October 2020.  If you agree to being furloughed, your employer will keep the situation under review and will continue to keep you updated. Please note that the minimum amount of time, as per the rules of the Government scheme, someone must be furloughed for 3 consecutive weeks, therefore you cannot be furloughed “part time” but employers can bring back employees part-time from July 2020 and if required for the remainder of the job

Q:  Will furlough leave stop and start?

Your employer may ask you to start and stop furlough leave at any time in line with the business requirement for you to undertake work. They will continually review the position regarding any employees on furlough leave in order to ensure that business demands are met.

They will give notice of any proposed changes. The minimum period of furlough leave will be 3 weeks, from July 2020 the minimum period will be one week and part-time furlough will be available.

Q: Should I be furloughed? What is the selection process for furlough leave?

Due to a downturn in business/reduction in demand/financial challenges, some businesses are in a position where they are proposing to agree a period of furlough leave with some employees. This is an alternative to redundancies or lay-offs.

In order to identify the staff they propose to discuss the potential for furlough leave, they will be adopting a fair and non-discriminatory process. The first step to this is to ask for volunteers. If they do not have enough volunteers from the areas of the business where workload has reduced or diminished, they may seek to identify other roles suitable for furlough leave.

As a reminder, there is no automatic right for you to be made furloughed when you volunteer, as the employer will still need to ensure that they can service their clients and deliver projects. They will consider your role in the company, the temporary loss of skills, the service needs and the impact, amongst other factors.

Q: How do I volunteer to take furlough leave?

If you would like to volunteer to take furlough leave you will need to contact your employer. They will review the applications and confirm to you whether your application has been successful.

They may consider voluntary furlough applications later during the crisis, subject to approval.

You will appreciate that this is a moving situation and  business requirements may change. Businesses will need to adapt accordingly.

Q: What if I am asked to agree to take furlough leave? Do I have to take furlough leave?

If you have not volunteered, your employer may write to you to seek your agreement to take furlough leave.

Please note that, if you do not agree, the alternative options may be:

  • Unpaid leave
  • Redundancy
  • Lay-off
  • Annual leave

Employers believe that this current situation is likely to be temporary and hopefully that by having employees take furlough leave, it will avoid the need for redundancies. However, employers may advise you that if they do not obtain sufficient consent to implement furlough leave under the Coronavirus Job Retention Scheme, they may be left with no alternative but to consider other ways of managing this situation, including redundancy. Therefore, employers are seeking their employees cooperation during what they appreciate is an unsettling time.

Q: Unpaid Leave

Update 17.04.2020 – Confirmation that an employee on unpaid leave may be moved to furlough leave.

Q: What happens to my fixed term contract?

If you are on a fixed term contract, you may be asked to take furlough leave for the remaining duration of the contract.

Update 17.04.2020 – Clarification that fixed term contracts may be extended whilst the employee is on furlough leave.

Q: I am a new starter.  Am I eligible to take furlough leave?

New starters who joined after the 19th March 2020 are not eligible for this scheme and therefore cannot take furlough leave.  If you joined on or before 19 March and your employer has submitted a payment through HMRC by 19th March, you can volunteer or may be asked to agree to take furlough leave.

If you are in your probationary period, your employer would pause your probation and restart when the furlough period is over.

Q: What if I am off sick or self-isolating?

If you are currently sick or self-isolating due to coronavirus, you are eligible for the scheme and your employer may end your sick leave and start furlough leave.

If you are on sick leave you are eligible to receive SSP from day one of your sickness absence.

Q: What if I am shielding or living with someone who is shielding?

If you, or someone in your household, are shielding in line with public health guidance, you are eligible for furlough leave under this scheme.

Q: What if I have caring responsibilities and am finding it difficult to work whilst caring?

We appreciate that it is difficult to work and provide care for someone who needs it, including children.  The Government have updated the guidance to allow you to apply for furlough leave if this is your situation.

Q: What happens if I am on Maternity/Paternity/Adoption/Shared Parental Leave?

Legally, you must take at least 2 weeks Maternity Leave (4 weeks if you work in a factory or workshop) immediately following the birth of your baby. This is a legal and health and safety requirement.

If you are eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and you will be entitled to claim up to 39 weeks of statutory pay or allowance.

If you qualify for SMP, you will still be eligible for 90% of your average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of your average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £148.68 per week, rising to £151.20 per week from 6th April 2020.

The same principles apply if you qualify for contractual adoption pay, paternity pay and shared parental pay.

NB If an employer ‘tops up’ SMP and your employees are eligible for enhanced company maternity pay, this is included in the wages cost you can claim through the scheme. i.e. you can claim up to 80% of the company maternity pay amount.

Update 17.04.2020 – Furlough pay is included in the reference period when calculating statutory pay (maternity, paternity, adoption, shared parental etc).


If you are currently pregnant and due to start Maternity Leave

You will start Maternity Leave as usual. If your earnings have reduced due to a period on furlough or statutory sick pay prior to your Maternity Leave starting this may affect your Statutory Maternity Pay. The same principle applies to contractual adoption pay, paternity pay and shared parental pay.

Q: What happens if I am on maternity leave receiving maternity allowance and I want to be furloughed?

You cannot be furloughed whilst receiving maternity allowance and you would need to give 8 weeks’ notice to return early. You should discuss with your employer whether they would furlough you if you chose to return early. If you would still be receiving maternity allowance when you return you would need to contact the Job Centre Plus to stop your maternity allowance due to being furloughed instead.


Annual leave

Q. Does holiday accrue during furlough leave?

Yes, all other terms are conditions remain unaffected during a period of being furloughed, save for any contractual variations (including regarding contractual leave) that may have been agreed.

Q. Can annual leave be taken during furlough leave?

Update 17.04.2020 – The guidance confirms that annual leave may be taken during furlough leave, but it must be paid at 100% of normal pay.

If you are on furlough leave, your employer may give notice to you to stop furlough leave so you can take annual leave.

Q: What happens if I cannot take all of my annual leave entitlement due to coronavirus?

In most situations, you should use your annual leave in your current leave year.

This is important because taking holiday helps you to:

  • get enough rest
  • keep healthy (physically and mentally)

During the coronavirus outbreak, it may not be possible for you to take all of your holiday entitlement and you may be getting to the end of the annual leave year with holiday still left to take.

The government has introduced a temporary new law to deal with coronavirus disruption. Under this law, you can carry over up to 4 weeks’ paid holiday over a 2-year period, if you cannot take holiday due to coronavirus.

For example, this could be because:

  • you are self-isolating or are too sick to take holiday before the end of the leave year
  • you have been temporarily agreed to furlough leave or been laid off because there is no work
  • You have had to continue working and could not take paid holiday

This does not affect any annual leave carry over provisions you already have in place in your annual leave policy.


Bank holidays

If you cannot take bank holidays off due to coronavirus, you should use the holiday at a later date in the leave year.

If this is not possible, bank holidays can be included in the 4 weeks’ paid holiday that can be carried over. This holiday can be taken at any time over a 2-year period.

Previously booked holidays

If you no longer want to take the time off you had previously booked, for example because your holiday has been cancelled, your employer may still tell you to take the time off.

If you want to change when you take this time off, you should write to your line manager giving your reasons and they will consider your request carefully. There is no obligation to agree to this request.

Using holiday for a temporary workplace closure

Your employer has the right to tell you when to take holiday if they need to.  They could, for example, shut for a week and tell everyone to use their holiday entitlement.

If your employer decides to do this, they will tell you at least twice as many days before as the amount of days they need people to take.  For example, if they want to close for 5 days, they should tell everyone at least 10 days before.

This could affect holiday you have already booked or planned.

If this is the case, they will:

  • explain clearly why we need to close
  • try and resolve anyone’s worries about how it will affect your holiday entitlement or plans

Payments

Q: How much will I be paid?

You will receive 80% of your usual base pay, capped at a maximum of £2,500 per month. This will be subject to employee tax, national insurance pension deductions. The Government Scheme enables your employer to reclaim 80% of all furloughed workers pay. You will also continue to receive your contractual benefits as if you are working and you will accrue annual leave at your standard rate.

Q: Will I get Statutory Sick Pay (SSP) on furlough?

If you are on SSP then you will not be entitled to furlough at the same time. When you are off SSP you will be moved to furlough if appropriate.


Employer Questions

Q:Redundancy during furlough? 

If you have not volunteered, your employer may write to you to seek your agreement to take furlough leave. Your employer hopes that you will seriously consider the request. Please note that, if you do not agree, the alternative options may be:

1. Unpaid leave;

2. Redundancy;

3. Lay-off;

4. Annual leave.

Employers believe that this current situation is likely to be temporary and hopefully that by having employees take furlough leave, it will avoid the need for redundancies. However, employers may advise you that if they do not obtain sufficient consent to implement furlough leave under the Coronavirus Job Retention Scheme, they may be left with no alternative but to consider other ways of managing this situation, including redundancy. Therefore, employers are seeking their employees cooperation during what they appreciate is an unsettling time.

What happens if I’m furloughed and I only work term time?

Furlough should stop at the end of term. You would then start the normal school holidays. When term resumes, so does furlough.

Do I have to furlough all my staff?  

The decision is the employers but they must consider vulnerable groups or face potential claims for failure to provide a safe place to work.  Employees cannot do any work for the employer whilst on furlough, but from  July 2020 can choose to furlough employees’ part-time e.g.  working normally 3 days per week and being furloughed for 2 days per week.

Do employers have to top up wages from 80% to 100%? 

No they do not have to make up the difference to 100% unless the employee is taking annual leave whilst on furlough, then they must receive 100% of their usual salary.

Do employers still have to pay 13.8% NIC’s?

Yes employers still have to pay 13.8% NIC on the 80% payment to furloughed employees. This will be included in the grant received from the government up until the end of July 2020 after which time the employer will have to pay NIC and employer pension contributions.

Do employers still  have to make pension contributions? 

Yes employers will have to maintain pension contributions, there is also an option to take a pension break for employee and employer. 3% can be claimed back if paid by the employer until the end of July 2020, after which time the employer have to pay employer pension contributions.

Can an employee work for someone else whilst furloughed? 

Yes, the employee can volunteer and could work for someone else if employer agrees and their contracts allows it, whilst on furlough.

Can we furlough employees multiple times?

Yes,  provided each period of furlough is for a minimum of 3 weeks, from July 2020 you will be able to be furloughed for the minimum period of one week.

What is covered under ‘wages’ within the coronavirus job retention scheme? 

You will receive 80% of your usual base pay, capped at a maximum of £2,500 per month. This will be subject to employee tax, national insurance pension deductions.  The Government Scheme enables your employer to reclaim 80% of all furloughed workers pay.
You will also continue to receive your contractual benefits as if you are working and you will accrue annual leave at your standard rate.

Will overtime and commission be included in the calculation of wages?

You will receive 80% of your usual base pay, capped at a maximum of £2,500 per month. This will be subject to employee tax, national insurance pension deductions.
You will also continue to receive your contractual benefits as if you are working and you will accrue annual leave at your standard rate.

What evidence of furlough is needed? 

Employers need to get an agreement in writing from their employee and retain it for 5 years.

Do we need the employees agreement to furlough? 

Check the employment contract for a lay off clause. We would advise that letters are issued to employees and their signed agreement received. The alternatives are redundancy, short term working etc.

What if the employee does not agree to be furloughed?

Employer can look at alternatives which include redundancy if there is no work.  Further details regarding communication to employees and collective redundancies are available from enquiries@sylo-associates.co.uk

If we have a lay-off clause in our contract do we have to seek agreement to furlough employees? 

We advise to still seek written agreement even with a lay-off clause and state the reason for furloughing.

Can employees away from work due to caring responsibilities be furloughed? 

Yes, employees who are away from work due to caring responsibilities can volunteer to be furloughed.

We have employees on unpaid leave, can we furlough them? 

Employees who were on  unpaid sabbaticals or any unpaid leave as at 28th February 2020 where the intended period of that sabbatical or leave is still running, cannot be furloughed and they must come back on the intended return date and then be furloughed as applicable.

Can an apprentice be furloughed? 

Apprentices can be furloughed and can continue to train but be paid the minimum wage while they are training.

Does the employer have to pay the apprenticeship levy? 

Yes, it will be deducted in the same way.

Can we bring employees back temporarily off furlough and then furlough them again if we are not busy?

Furlough is for a 3 week minimum period and we advise employers to word furlough agreements to allow you to bring employees back without having to complete a separate agreement each time.  From July 2020 you will be able to furlough employees for a minimum of one week but they will already have been furloughed for three week block(s) in previous months.

Can we make employees who are furloughed redundant?

Employees can be made redundant, however we advice you get HR advice before proceeding to review all options including selection criteria.

What are the changes to the extended Coronavirus Job Retention Scheme? 

Employers cannot furlough new entrants from 30th June, with the exception for employees on certain types of family leave or mobalised military reservists, therefore the last date they can commence using the coronavirus job retention scheme to furlough employees is 10th June 2020 as they need to be furloughed for 3 weeks prior to 30th June.  From July 2020 employers can choose to furlough employees on a part-time basis but the scheme will otherwise remain the same.  From August employers have to pay employers NIC’s and employers pension contributions, from September the scheme will only pay 70% of salaries, and during October 60% of salaries leaving employers to top up to a minimum of 80% during September and October 2020, 10% and 20% respectively as well.

Will I need to be furloughed for a minimum of 3 weeks under the new flexible furlough rules? 

Employers can claim for a minimum of one week and there are no restrictions on the number of hours or working pattern an employee can work from July 2020, however they must have been furloughed previously which would incorporate at least one three week block.

If returning from family leave can I still be furloughed?

On 9 June 2020, the government confirmed that employees who are returning from certain types of family leave in the coming months are not subject to the 10 June cut-off date where they are returning to work for an employer who has previously furloughed employees. This will apply to those who return from maternity, paternity, adoption, shared parental and parental bereavement leave.

Can military reservists returning to work after a period of service be furloughed?

You can furlough an employee who is a military reservist returning to work after a period of mobilisation after 10 June, even if you are furloughing them for the first time.

Is there a limit on how many employees I can claim from July when the new scheme starts?

The number of employees you can claim for in any claim period starting from 1 July 2020 cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June 2020. This may differ where you have an employee returning from statutory parental leave or who is a returning military reservist.

How long will I have to make a claim?

Employers will have until 31 July to make any claims for claim periods up to 30 June.

Can I make a claim for overlapping months?

From 1 July, claim periods will no longer be able to overlap months. Employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward.


Disclaimer

Please note – this guidance is not intended to be taken as legal advice – for individual situations you will need to take specific legal advice.

  • For any employee queries or issues please contact SYLO Associates
  • The information in this guide is correct as of 29th June 2020.
  • All advice given should be read alongside the Government Guidance at Gov.uk