Furloughed workers and the Job Retention Scheme: FAQs part 3

The Job Retention Scheme was introduced on 26 March 2020.  Following the latest guidance from the Government published on 4 April 2020, we set out below a new update for employers on the  further questions that continue to arise  in relation to the Job Retention Scheme.

 

How do you calculate your claim?

Under the original scheme, employers can claim up to 80% of the employee’s actual salary and employer National Insurance contributions and minimum automatic enrollment pension contributions calculated on the subsidised wage. You can also claim for any regular payments you are obliged to pay your employees.  These include past overtime, fees and compulsory commission payments. The guidance does not define the meaning of compulsory however, it would be reasonable to presume this means the contractual commission.  Discretionary bonus (including tips), commission payments and non cash payments such as a company car or private health insurance cannot be included.

 

When can I claim?

Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is  made, or when they are written to confirming their furloughed status.

 

What paperwork do I need to complete with my employees ?

To be eligible for the grant,  employers must confirm in writing to their employee confirming that they have been furloughed. We recommend that as part of this communication, employees are expressly asked to consent in writing to being designated as furloughed. A record of this communication should be retained by both parties.  We recommend that employers keep the record for at least five years.

 

Can a company director be furloughed?

In addition to the extensive list of employees who can be furloughed, the Government has provided confirmation that this does include company directors. Although they can still perform their statutory duties whilst furloughed (precisely what comprises a statutory duty has not been clarified any further within the guidance), they cannot undertake any other work for the company.

 

Can furloughed workers seek alternative employment?

It is now possible for those employees who have been furloughed to seek alternative employment with a new employer where this is permitted in their contract of employment.  An employer can also choose to waive any pre existing prohibition upon taking alternative employment. This means, of course, that employees who do commence work for another company whilst furloughed will receive 80% of their current salary as well as 100% of any new salary.

 

Can employees with caring responsibilities  be furloughed ?

Employee who are unable to work because they have caring responsibilities resulting from Covid 19 can be furloughed.  These would include those employees that need to look after children following the closure of schools and nurseries.

 

Can Apprentices be furloughed ?

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.  Apprentices must be paid at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage  as appropriate for all the time they spend training .  This means an employer must over any short fall between the amount you can claim for their wages through the Job Retention Scheme and their appropriate minimum wage.

 

Can an employee on a fixed term contract be furloughed?

Yes.  Their  contracts can be renewed or extended during the furlough period without breaking the terms of the scheme.  If a fixed term employee’s contract ends because it is not extended or renewed the employer will however no longer be able to claim grant for them.

 

What is the impact of salary sacrifice?

Many employers allow employees to participate in a salary sacrifice scheme whereby the employee agrees to reduce their earnings  by an amount equal to their pension contributions.  A furloughed employee may wish to switch out of this arrangement when facing a period on reduced income.  Normally an employee cannot switch freely out of a salary sacrifice scheme unless there is what is termed a “life event”.

HMRC have agreed that Covid 19 counts as a life event  that could warrant changes to salary sacrifice arrangements.  An employee can therefore alter their salary sacrifice arrangements and their employment contract updated accordingly.

 

Are the Apprenticeship levy and student loans covered by the scheme?

No. Both the Apprenticeship  levy and student loans should continue to be paid as usual.  Grants do not cover these.

 

If a furloughed employee returns to work, can they be furloughed again?

Yes, employees can be furloughed more than once and so an employee who had previously been furloughed can be brought back to work and then returned to furloughed status if required by the employer.  Employees can be furloughed multiple times but each separate instance must be for a minimum period of 3 consecutive weeks.

 

If you have further questions on any matters raised in these FAQs, please do not hesitate to contact our employment team at employment@keebles.com for any further advice.

This general guidance is correct as at 4 April 2020 but may be subject to change.

We strongly recommend that specific advice is sought as needed.

 

 

 

6 April 2020

Catherine Wilson

Catherine specilaises in all aspects of employment law, with a particular emphasis on discrimination, whistleblowing, redundancies and senior executive severances. Catherine is head of employment at Keebles LLP.

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