Mandy Fitzmaurice of Purple HR explains what’s new with the Furlough Scheme.
As we go into the third week of lockdown, a lot of the essential leg-work has now been done to ensure businesses are ready to be able to take advantage of the Furlough Scheme and more questions are now coming up about what staff are actually allowed to do when they are on Furlough, what about top-up, can they do training, other jobs etc. to name just a few.
Q: Do I need to have agreements in place in order to get the Furlough grant?
A: Yes. You have to have the employee’s agreement in writing that they accept being placed onto Furlough as this is a contractual change to their contract. This is particularly so if you don’t have a Lay Off clause in your contracts of employment.
Once you have agreement, you then need to write to the employee to tell them they are being placed on Furlough. Today’s guidance specifically states that this paperwork must be kept for 5 years.
Q: I have an employee who has been self-isolating for 2 weeks but is now well but wants to stay at home because they are worried. Do I have to agree to them being Furloughed?
A: If neither they or any member of their household has any symptoms or has been notified by the NHS that they are in the high-risk category and you can’t give them any work to do at home, then they would be required to come into work (providing you are not a business that the government has deemed must close).
If they refuse, then this would technically be unauthorised absence and therefore any time off would be unpaid or they would have to take it from their holiday allowance. Please note you may not discipline or dismiss any employee on these grounds, it will be an automatic unfair dismissal and be treated the same as a discriminatory claim, ie the 2 year service requirement does not apply and any award would be uncapped.
Q: I have an employee who resigned and left us to work somewhere else after 28th February. We’ve issued their P45 and they’ve had their final pay, do I have to take them back on?
A: No. They left voluntarily, it is unfortunate that the timing of their departure coincided with the COVID-19 pandemic, but you are under no obligation to reinstate them and place them on Furlough. They are no longer your responsibility, rough as that may sound.
Would you like to take them back and help them out? Yes, if you wish to, you can, providing they were on your payroll on 28th February 2020. However, please be aware that in doing so you will be reinstating them ie re-winding the clock as if they had never left. So, their original start date, continuous service and T&Cs would prevail. If there is no break in service all contractual arrangements would be resurrected and anyone who has or would have, if they returned to you, accrued more than 2 years’ service would then qualify for statutory redundancy pay, notice pay and moreover you would assume full responsibility to pay their wages/salary in accordance with their contract of employment. Any changes would need the employee’s explicit agreement but nothing would remove their statutory employment rights in regard to continuous service, redundancy and notice pay, accrual of annual leave and entitlement to any contractual sick pay arrangements that you may have in place.
Could you renegotiate a contract for them to return? Possibly, but before you agreed this with anyone, you would need to look at each situation individually and fully understand whether there it was possible to reduce the liabilities. The starting point is that you need to be prepared to take back all of the previous employment terms, which remember, will be there long after Furlough is over.
Q: Can employees work somewhere else when they are on Furlough?
A: The guidance on this has changed. Up to today, employees were allowed to take a second job whilst on Furlough providing (a) that their employer agrees (a lot of contracts have clauses that forbids secondary employment) and (b) that any other job is only done outside of the contracted days/hours for which they are on Furlough from.
In other words, if I work for you Monday to Friday, 9 to 5 and I’m Furloughed, I couldn’t work anywhere else Monday to Friday, but I could work weekends and evenings.
However, the latest guidance has changed and it now states that providing you, the employer, agrees, the employee may take other employment whilst on Furlough from you without it affecting the grant that you can claim under the scheme. However, they will need to be ready and able to return to work if you decide to bring them back from Furlough. If they do take on new employment, they will have to complete the HMRC Starter Checklist form with the new employer and will be taxed at basic rate tax on the second job.
This is a big change and now means that people can take up second jobs while on Furlough, subject to the contract (and you) permitting.
Q: Can employees undertake training when they are on Furlough?
A: Yes, Furloughed employees can engage in training, as long the training being done does not provide services to, or generate revenue for, or on behalf of the business.
The guidance is saying that Furloughed employees should be encouraged to undertake training, but that where training is undertaken they are entitled to be paid at least their appropriate national minimum wage for any time spent training.
Today, the guidance is now saying that in most cases, the Furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the Furlough payment, you would need to pay the additional wages.
Let’s look at an example. Employee, over the age of 25, is entitled to a NMW rate of £8.72 p/hr (remember NMW rates go up on Monday 6 April 2020). Their annual salary is £25,000 a year. They will receive 80% on Furlough, which is £1666.66 (under the cap of £2500),
You ask them to catch up on some training or study whilst they are at home, it’s not going to generate you any revenue or provide services to any customers. They spend 25 hours over the course of the 3-week Furlough period on this so they are entitled to be paid for those hours, at a minimum of the NMW rate, which would equate to 25 x £8.72 = £218.00. This is well under the £1666.66 Furlough payment they will receive, so there would be nothing extra to pay them.
Make sure you do keep good records of any training, including dates and time spent as these are likely to be subject to audit by HMRC down the line.
For a more extensive review please contact Mandy at www.purplehr.co.uk 01202 801047 or Steve Bulley at Dorset Chamber. 01202 714806.