Coronavirus (Covid-19) FAQs for employers

Over the past few days the government has updated its guidance on the Coronavirus Job Retention Scheme (CJRS).  In certain respects the updated guidance provides more clarity, but some ambiguities still remain.  Here are some FAQs which reflect the discussions we have been having with each other, and the queries we have been receiving from our clients.

Can you prevent someone working elsewhere during furlough if you're topping up their salary to 100%?

The CJRS guidance makes it clear that an employee can be furloughed by one employer but continue to work for another, if their contract of employment allows it. So an employer will need to check what is in the contract; such a clause can, of course, be varied if an employer wishes to allow a furloughed employee to work elsewhere. 

Can someone who is off on furlough leave take holiday?

The recently updated Acas guidance on holidays, which has no statutory force, states that those who are furloughed can still request and take their holiday in the usual way, including bank holidays. The Acas guidance makes it clear that employees and workers must get their usual pay in full for any holidays they take.

Unfortunately the CJRS guidance is silent on holidays, be that whether they can be taken or reimbursed through the scheme. Given HMRC has been referring people raising holiday pay queries to the Acas guidance it seems likely that this is the intention.  

Hopefully the position on holidays will be clarified as a matter of urgency and as soon as it is we will update you.

Should you be reinstating people who were made redundant on or after 28 February?

The CJRS guidance states that "if you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme."

There is no obligation to do this.  The potential risk in not considering this is that people may challenge the redundancy decision on the basis that furloughing has offered the employer another option (albeit a temporary one).  However, the reason for the redundancy may not be related to the coronavirus pandemic (for example it could be due to a re-organisation), or the employee may have been disciplined and dismissed, or dismissed for capability reasons.  In all of these instances it is likely to be counterproductive to re-employ them and provided the proper processes were followed, there will be a concrete reason behind their dismissal which should defeat any suggestion of unfairness.

Can you furlough staff if you're in receipt of public funding?

The CJRS guidance makes it clear that the government expects that the scheme will not be used by many public sector organisations "as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak".  It goes onto state that where employers receive public funding for staff costs, and that funding is continuing, the government expects employers to use that money to continue to pay staff in the usual fashion and not to furlough them.  This also applies to non-public sector employers who receive public funding for staff costs.  Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.

If you are receiving funding from a public body for a contract and all, or the majority, of that money is for the provision of that service (in other words staff costs) then, provided that the level of funding remains the same and no additional staff costs are incurred, you won't be able to furlough staff.  

There may be circumstances though where furloughing is an option.  An example of this could be where an employee needs to shield and cannot work from home, or where someone falls within the "vulnerable" category and cannot work from home.  In these instances you would have to incur additional costs to cover their role and if you do, we believe that you could furlough the employee who needs to shield.

What should be included in a furlough claim?

An employer can claim for 80% of your employees' wages, up to a maximum of £2,500 plus employer National Insurance Contributions and minimum automatic enrolment employer contributions on the subsidised wage.  You cannot claim for any additional NICs or pension contributions on any top up payments made.

You will also be able to claim for any regular payments you are obliged to pay your employees, including past overtime, fees and compulsory commission payments.  Discretionary bonus and commission payments and non-cash payments (for instance free travel) are excluded.

The cost of non-monetary benefits provided to employees, including taxable Benefits in Kind and benefits provided through salary sacrifice schemes that reduce an employee's taxable pay will not be included in the reference salary.  The CJRS guidance notes that normally an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. However, it states that HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements if the relevant employment contract is updated accordingly.  This means that an employee could restore their salary to a higher level for the purposes of furlough, although it would mean them losing the benefits. 

Both the Apprenticeship Levy and Student loans should continue to be paid as usual and will not be covered by the CJRS. 

HMRC has announced that the CJRS should be open from 20 April for claims, with payouts planned for 30 April.

Can you make an employee redundant rather than placing them on furlough leave?

Yes this is still possible but you will need to consider furlough leave as an alternative to redundancy as part of a fair process.

Can employees who are shielding be furloughed?

The revised CJRS guidance has made the position less clear for those who are "shielding". The revised guidance is clear that both shielding employees and those who “need to stay at home with someone who is shielding” may be furloughed if they cannot work from home but it goes on to say that the employer would “otherwise have to make them redundant”. This is odd and means that they are subject to a more onerous test than say employees with caring responsibilities.  It's, therefore, unclear whether the shielded person actually has to be at risk of redundancy in order to be furloughed.  We await clarification on this.

What happens in relation to employees who want to shield and have underlying health conditions, but have not been told to shield by the NHS/ their GP?

If an employee believes they should have been told to shield then they should contact their GP.   

If they are self-isolating in accordance with Public Health England's guidance or are otherwise too sick to work then then they should be paid statutory or company sick pay.  If a fit note suggests that their working arrangements should be reviewed rather than saying that they are not fit to work, then you should consider if any adjustments can be made to their role, or potentially consider redeploying them, if possible, on a temporary basis.

If an employee is fit then you should consider whether they can work from home or if they can be allocated other work to enable them to work from home.  If not then you can consider furloughing. 

Can you furlough staff who need to look after children following school and nursery closures?

Yes, you can.  The CJRS guidance makes it clear that employees who are unable to work because they have caring responsibilities resulting from coronavirus can be furloughed, and gives as a specific example employees that need to look after children.

If you have taken on staff by virtue of TUPE on or after 28 February, can you furlough them?

The CJRS guidance makes it clear that furloughing is only an option for staff on the payroll on, or before, 28 February.  Where then does this leave employees who have TUPE transferred to a new employee on or after 28 February?  Will they be prevented from being furloughed?  Yes but HM Treasury has confirmed to David Johnston MP that those who transferred on or after 28 February can be covered by the scheme.  We are waiting for this to be reflected in the CJRS guidance. 

Do pension contributions continue for staff on furlough?

Yes, the Pensions Regulator has made it clear that both employer and employee pension contributions should continue whether staff are on furlough or not, although it has acknowledged that it will take a "proportionate and risk based approach" towards enforcement decisions.

Under the CJRS, as well as 80% of furloughed employees’ usual monthly wage costs, up to £2,500 a month, employers can also claim the associated employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.  The amount received by staff will be subject to deductions for their pension contribution, employee NICs and tax.

If the employer was paying more than the auto-enrolment minimum and decides not to top up the pension contribution there is a potential breach of contract risk and technically there is a requirement to consult for 60 days.  However, our view is the risk is low provided employers have explained the position clearly to staff and given them the opportunity to raise questions or concerns.