Furlough Leave
 
Sentient Group Ltd
 
Info Update 2020/09                                                         Issue Date: 24/03/2020
 
The Coronavirus Job Retention Scheme
 
The Government has announced that it will be providing support for businesses through the ‘Coronavirus Job Retention Scheme’ which provides that, all UK employers will be able to access support to continue paying part of their employees’ salary/wages for those employees that would otherwise have been laid off during this crisis. ‘Laid off’ in this context will mean in general rather than in the technical sense.
 
Available guidance on the scheme so far remains limited but we have tried to best summarise the current position.

The Scheme
HMRC will reimburse 80% of furloughed workers salary/wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
 
It is not clear at this stage whether the £2,500 cap relates to gross pay or net payment, but indications are from reading current guidance on this is that this will be the net pay cap.
 
The guidance is that when put on furlough, employees should not undertake work but 
will remain employed and on the payroll. Employers are not required to make up the remaining 20% but they can of course do so if they want to.
 
The government has stated that the scheme will be backdated to 1st March 2020, will run for an initial three months and will be extended if necessary. We are unsure if the 3 months runs only from 1st March or whether it is three months from the date an employer furloughs employees.  We do believe that this means that if an employer has already ‘laid off’ employees since 1st March they can untangle this and declare them to be ‘Furloughed’ employees.
 
Eligibility
All UK businesses are eligible. The guidance currently does not state any limitation to this, so it will apply to limited companies, LLPs, Partnerships, charities, sole traders etc.

Designating Employees
At this point we believe that you can insist that an employee is furloughed if you have a clause in the contract that allows for the employee to be ‘laid off’. If not, then technically you would have to get their consent. Given the alternative may be redundancy we do not think consent is likely to be refused but it is recommended you get written consent from your employees.
 
Designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. There is currently no definition of a ‘furloughed worker’ in UK employment legislation, and the term is used as a means of categorising those workers who will be affected by lack of work due to Coronavirus.

Answers to many questions are right now open to guesswork, such as:
  • If I put an employee on furlough and they have holidays booked during this period what happens to the holiday?
  • Can we put people on Furlough part time and have them work part time?
  • Can I bring employees on furlough back into work for a short period and then back onto furlough?
  • Can I share the furlough out amongst my employees such that they work alternate weeks?
At this time we cannot answer these but will keep monitoring guidance as it becomes available.

How to access the scheme
You will need to:
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required). As of 24 March 2020 at 15:00pm, there remains no portal or information regarding such portal as yet.
  • The guidance also states that if your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.
 
Self Employed and Freelancers
This morning we heard that the House of Commons Public Bill Committee has proposed an amendment to the Coronavirus Bill, entitled 'Statutory Self-Employment Pay'. 
 
If accepted, it compels the government to introduce Regulations providing that 'freelancers' (undefined) and 'self-employed people' should receive guaranteed earnings of: 
a) 80% of their monthly net earnings, averaged over the last three years; or, 
b) £2,917 per month;
whicever is the lower. 
 
The purpose of this amendment is to make the Government 'top-up' self-employed workers' earnings to the lower of 80% of their net monthly earnings of £2,917 a month.
 
We will provide further comment when more infomation becomes clear. 
 
 
The advice and comment in this update is not meant to be an authoritative statement of the law. The articles and summaries should not be applied to any specific set of facts and circumstances without seeking further advice. Whilst every care is taken to ensure that the content is correct Sentient cannot accept responsibility for the accuracy of statements made nor the result of any actions taken by individuals after reading such.
 
 
Sentient
49-51 Pegholme
Wharfebank Mills
Ilkley Road
Otley
LS21 3JP
03456 446006
info@sentientuk.co.uk 
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