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What do you need to know about furloughing staff?

9th Apr 2020
APSCo
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What do you need to know about furloughing staff?

With the government’s landmark announcement that companies can furlough employees in order to survive the economic impact of COVID-19, many employers are facing the possibility of temporarily losing staff, but are also still unsure of the intricacies surrounding the process and whether it is the best decision for them to take during the current crisis. For those facing this situation, here’s some of the key information that the Association of Professional Staffing Companies (APSCo) has been sharing with its members.

‘Furloughing’

To limit the damage to companies and employees as a result of the coronavirus, Chancellor Rishi Sunak announced on 20th March 2020 that the government would introduce a Coronavirus Job Retention Scheme. This allows businesses to retain employees without the need to work but to still receive a minimum level of salary, otherwise known as ‘furlough’. The purpose is to reduce redundancies and to avoid people being laid off without pay.

Under the scheme, UK employers can access support from the government to continue paying the salary of employees on the PAYE payroll who would otherwise have been laid off during the current lockdown. While employees are on furlough the government has committed to repaying 80% of employment costs – up £2,500 per month. It will also cover employer national insurance contributions and pension contributions.

An online portal is being created to enable employers to reclaim this money from HMRC which is due to be operational by the end of April. The initial scheme will apply for 3 months from 1st March but may be extended further.

How to agree furlough and apply to the scheme

When furloughing employees, it’s important to remember that employers cannot force staff to be furloughed. Changing the status of employees remains subject to employment law and may be subject to negotiation.

Employers must ensure that those who are selected for furlough are chosen in a non-discriminatory manner. The minimum period of furlough is three weeks, so it may be possible to rotate who is on furlough to ensure that it is spread evenly amongst workers.

Once an employer has reached an agreement with employees about being furloughed, they should write to the affected individuals confirming that they have been furloughed and should keep a record of this.

Employers can then access the scheme through an online portal, and provide details of furloughed employees. To work out what amounts they are claiming employers will have to calculate the employer NI and pension contributions for all employees.  When the portal is operational, businesses will apply with their ePAYE reference number, bank account number and sort code and specify:

· The number of individuals being furloughed

· The length of the claim period

· The amount claimed

· The employer’s contact details

Finally, while furloughed workers will receive either 80% of their regular wage, or £2,500 per month, employers can choose to top up the remainder of the employee’s salary – but they are not obliged to. 

Redundancy

If businesses need to make furloughed employees redundant at a later stage, firms must follow a standard redundancy procedure and notice period should be paid at full salary. On the other hand, if you made staff redundant as a result of the Coronavirus crisis, you can reinstate them to take advantage of the scheme.

During furlough 

During the furlough, staff must not do any work for the employer. This includes checking emails or forwarding anything on to their colleagues who are working, as this might be deemed ‘providing services’ and endanger the furlough claim.

However, employers can still allow furloughed employees to take part in online training. They must ensure that these individuals receive at least national minimum wage for their time spent training. However, this will be covered by the furlough payment if the employee’s salary is above the national minimum wage or national living wage.

One step at a time

While COVID-19 will inevitably adversely affect the economy, the job retention scheme is a much needed intervention by the government that will mitigate some of the impact of the pandemic As so many of the recruitment firms we support have been vocalising, once we come out of the other side of this, businesses will still need people, so any opportunity to keep staff engaged should certainly be taken.

While the above is a brief overview of the scheme we recommend anyone looking for further information to visit the government’s official guidance on the topic. 

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