Furlough and Coronavirus Job Retention Scheme update

|

Yesterday, the Government issued the 4th version of their guidelines on furlough leave as well as The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction. Here, MIA partner, The HR Point explain the important changes and gives further clarification…

  1. Employees now are eligible if they were on the payroll at 19 March – the technicality of this means they had to be on an RTI submitted on or before 19 March.  What does this mean?  If someone joined on 1st March and your payroll is on 23rd of the month they are not eligible.  If someone joined on 1st of March and you paid them on 18th March they are eligible.
  2. Employees must:
    1. Have been instructed to cease all work by the employer – if you have not done this you must ensure this is done – our furlough leave agreement covers this
    2. Ceased or will have ceased work for 21 days or more
    3. The reason for the instruction to cease work is “of circumstances arising as a result of coronavirus or coronavirus disease”
  3. Employees can be “instructed” to cease work while off sick but furlough does not start until the sickness period has ended – e.g. off sick with symptoms for 7 days, you can notify of furlough but furlough does not start until day 8.
  4. Employees can not work for a person connected with the employer or otherwise works  indirectly for the employer.
  5. If an employee was on unpaid leave at 28 February, furlough starts when that existing period of unpaid leave was due to end.
  6. Directors can be furloughed but can only carry out duties or obligations arising from and Act of Parliament relating to the filing of a Company’s accounts or provision of other information.
  7. Training can be done while on furlough and is not deemed work but should be paid at least the National Minimum / Living Wage.
  8. The payment is based on an employee’s regular salary (no account of anything that is not regular salary) as long as it is not conditional on any matter, does not vary depending on the performance of any part of the business, the employees contribution or performance, any similar considerations.
  9. There is a clear specification for determining if an individual is fixed salary – they have an contractual entitlement to be paid an annual salary, there is no other payment to any other payment in respect of their basic hours, they are paid in equal instalments regardless of hour many hours or days fall in each period and the basic hours of work do not vary according to the business, economic or agricultural seasonal considerations.
  10.   If an employee does not meet the fixed rate definition they fall into the variable pay rules and should be paid the great of the average amount paid on 2019-2020 tax year or actual amount paid that month in the previous year;

e.g.1 – an employee is paid monthly and earnt an average of £1200 per month before
tax.  Last April they were paid £1500.  Their 80% should be based on the £1500
e.g.2 – an employee is paid monthly and earnt an average of £1300 per month.
In April last year they were paid £1200.  Their 80% should be based on the £1300.

  1. In calculating average pay periods of unpaid leave should be discounted.
  2. No claim can be made for payments due for statutory leave such as SSP, Maternity pay, adoption pay, paternity pay, shared parental leave or parental bereavement pay.  But can be made for Company payments over and above statutory pay rates.
  3. Employees who TUPE transferred to a new employer can be furloughed.

Holiday and furlough

This picture is getting clearer – slightly!  We now know any holiday during furlough should be paid at 100%.

HoweverWe do not know if taking holiday breaks furlough leave and could result in ineligible claims for the grant!  HMRC have been asked, they referred to ACAS, ACAS have not yet issued anything on this!

If your employees normally took holiday for bank holidays or normally get paid for bank holidays you have a decision to make on how you treat the Easter Bank holidays:

  1.  Treat them as normal and pay them at their normal rate (deduct holiday days / hours if included in the holiday entitlement)
  2. Pay at 80% and at worst top up once we have clarification
  3. Add the time to their leave entitlement for them to take at another date

Don’t’ forget up to 20 days can now be carried over into the next 2 holiday years.

The HR Point have a furlough leave agreement document available. If you are an MIA member and would like a copy of this, or any other guidance, please contact mia@thehrpoint.co.uk or call 01903 783584.

www.thehrpoint.co.uk