There are lots of myths and legend about Coronavirus (COVID-19). In an attempt to simplify things we’ve prepared a Question and Answer on Furlough.
From 20th March 2020, the Government announced a series of measures to assist businesses and their employees during the current COVID-19 pandemic. At this stage we are limited on detail, but are informed measures will be backdated to 1st March 2020.
Furlough – Your Questions Answered
What does it mean to put my employees on furlough?
The employee is on Furlough if they have been sent home without work. It is for employees who are homeworkers or sent home to work instead of remaining at their place of work.
Do all businesses qualify?
If you are an employer, including sole trader, partnership, limited company or limited liability partnership you can claim under the Government initiative. You must, however, be an employer of employees, and have them home without work.
Is there a process for implementing this?
If you have a clause in the employment contract that allows for lay-off or short-time working you can implement furlough immediately. No consent is required. If your contracts have no lay-off clause technically consent will be needed. However, if an employee refuses to consent to be sent home on furlough, they can risk redundancy. If there is a need to make employees redundant you could make them redundant if they refuse so long as selection follows a fair process.
I only need to implement Furlough for part of the workforce. How do I choose?
We would say be open and transparent. Create a business case which can be shared with employees. Where you need a presence in the workplace but not the whole team, use a shortened version of your redundancy selection criteria to select. Your selection needs to demonstrate objectivity. Ask a HR provider to help if you’re unsure. If you use selection criteria linked to your redundancy, then you can use this criteria, should it be required later.
What can I claim and what do I pay my employee?
Employers can claim 80% salary payments from the Government. You can pay employees 100% salary paying the additional 20% from the business, but are not compelled to do this. If you choose to pay 80% salary, then get the employee to sign that they have read, understood and accept the changes. As mentioned previously, if an employee refuses furlough they can be made redundant so long as you have followed your procedure and fair selection has taken place.
What are the measures and how can I claim Furlough Government payments?
We understand HMRC are in the process of changing IT systems and will manage this through a new portal. It is anticipated this will be available buy April 2020 and payments will be backdated to 1 March 2020.
Furlough pay will be 80% of employee normal monthly wages capped at £2,500. The cap will include pension and NI contributions.
In summary the furlough process:
- Review the impact of COVID-19 on your business;
- Develop a business case to inform staff;
- Ask for their input. Sometimes frontline staff can come up with great innovation to either change working practices or to generate revenue;
- Make your employee selection for Furlough;
- Confirm furlough in woriting and secure written consent to 80% pay;
- Send the employee home without work; and
- Register for the Furlough Pay using the online registration portal (when up and running).
If you need any support please contact us either via the website or on 0191 303 7775.
Stay safe and good luck.