The F Word – What does it all mean?
Updated: May 14, 2020
We are now in the third week of lock down and many of us have been heard saying a word which we've never used before – The F Word: Furlough. This blog will aim to clarify some questions that have been coming up in relation to furlough and what you can and can't do. Some of the government guidance is very clear but there are still some areas that have question marks. If these areas get clarified, I will update this blog.
Many employers have now or will soon be furloughing their employees and applying for the Coronavirus Job Retention Scheme to cover 80% of the salary costs (up to a maximum of £2,500 per month). HMRC have confirmed that the portal for claims will be open on 20 April. They have also warned that any abuse of the scheme will be a criminal offence.
The aim of furlough is to avoid redundancies or lay-offs so it applies where there is no work available or working from home is not possible. People need to have been on your PAYE payroll as of 19 March 2020 to be eligible for the Job Retention Scheme.
Updated guidance has confirmed that employers must confirm furlough in writing to their workers and retain copies for a period of 5 years. As many employers won't have an appropriate clause in their contracts to allow them to unilaterally furlough people, gaining written consent is strongly recommended.
The minimum period for any furlough is 3 weeks and during this time, people are not allowed to carry out any work for the organisation. However, recent updates have explicitly confirmed that furloughed people can work for a different organisation and receive pay. This may sound like the government is allowing people to profit from furlough but I suspect that the reason for explicitly permitting this is to allow people to take on key activities where there are worker shortages.
Many employment contracts require employees to request permission from their employer to take on other employment so if a furloughed worker wants to take on another job while on furlough, you can require them to advise you of this if you have this clause. While it's wise not to refuse any request unreasonably, it is worth while being clear that they need to be available for work immediately after any furlough has ended.
What about people who are currently receiving SSP due to self-isolation or other sickness? The previous guidance stated that they shouldn't be furloughed until all SSP has been used or until the sickness period has ended. However, this was changed on 09 April to say "Short term illness/self-isolation should not be a consideration in deciding whether to furlough an employee. If, however, employers want to furlough employees for business reasons and they are currently off sick, they are eligible to do so, as with other employees.”.
Employers should be careful if they have contractual sick pay because if the individual is considered to be sick and follows all the correct certification process, they will be eligible to receive 100% of their salary so may not agree to being furloughed. Employers will not be able to make a claim against contractual sick pay under the Job Retention Scheme.
The updated guidance encourages employers to use this time to provide training to their people so long as they are receiving at least the national living wage or national minimum wage. On the surface, it makes sense to use this time to develop your people but, where this requires a financial investment, the uncertainty of future income may mean many employers will be be reluctant to spend money.
If an organisation is in the financial position to make an investment, there is no better time to get your people involved in development that they never normally have time to do – so long as it isn't generating any income for the business directly.
It is also possible to unfurlough people if work becomes available or if you wish to rotate furlough across your workforce. Remember that each period of furlough has to be a minimum of 3 weeks to qualify for the Job Retention Scheme, however.
Another area that is being talked about is the effect on mental well-being. While some people will find this downtime to be a positive thing where they can indulge time doing things they never normally get chance to do, others may feel isolated, lonely and without direction.
Employers still have a duty of care to their people and should consider how you can check in with your people. Perhaps think about prioritising people who you already know struggle with mental health issues or live on their own and agree with them how you can support them.
But, be careful not to use managers who have been furloughed to carry out this well-being activity as this could be considered to be working. In smaller organisations, this may not be an issue but where there are too many employees for the business owner to manage, it may be possible to use check-in surveys or even get a consultant to carry out the well-being checks. You could also provide your people with details of organisations or mobile apps which they can turn to if they are struggling.
Finally, let's address the topic of holiday during furlough. ACAS has clarified for employers that furloughed employees "can request and take holiday in the normal way". It advises employers to encourage employees to take their holiday in the current holiday year. It also confirms that employers can require people to use their holiday without explicitly referring to furloughed employees. This appears to indicate that employers could force people to take their holiday while on furlough, subject to notice, to prevent holiday accruals building up. Clearly, this latter point has not been tested legally.
Remember that the government has permitted up to 4 weeks' carry over over a 2 year period to help employers manage accrued holiday and people may resent being forced to use their allowance when they can't actually go anywhere.
In this fast-moving situation, it appears to have been confirmed that employees should receive their normal pay for any holidays, including bank holidays depending on what provisions there are in the contract for getting lieu days if bank holidays are not taken. Therefore, with the Easter weekend coming up, employers should investigate what they need to pay for Good Friday and Easter Monday for furloughed employees.
From April 2020, the average period used to calculate holiday pay was raised from 12 weeks to 52 weeks and should include overtime and additional contractual payments such as allowances or commission.
The government has confirmed that the Coronavirus Job Retention Scheme will be in place unchanged until 31 July and further support will be available from August to October but there may be changes to make it more flexible to support part time working and employers may have to share some of the costs. The details relating to the updated scheme are due at the end of May and I will post a new blog to reflect any changes once the details have been published.
2020 HR can assist with people management training, well-being check-ins, the process of obtaining consent to furlough and many other aspects relating to the current situation. If you need help, there is a free 30 minute telephone consultation available to small businesses.