The UK is now in lockdown. Many businesses have been forced to temporarily close and others have less work for their staff to do. Businesses in the property industry exposed to tenants in the retail and office sector are particularly suffering, but as viewings cease, construction sites empty, tenants can’t pay rent and deals generally dry up, businesses across the sector, both commercial and residential, are being severely impacted.
To avoid mass unemployment, the government introduced the Coronavirus Job Retention Scheme (commonly referred to as the “furlough” scheme) to encourage employers to retain staff who are unable to work or for whom there is not enough work during the pandemic.
What does ‘furloughed’ mean?
If you are furloughed you’ll remain employed but will not be asked to work and your employer will submit a claim to HM Revenue & Customs to pay up to 80% of your wages.
You can be furloughed for a minimum period of three weeks and the scheme will be open until 1 June but may be extended.
Who can be furloughed?
The main criterion is that you must have been on your employer’s PAYE payroll on 28 February 2020. It doesn’t matter if you work full or part time, have flexible working hours or are engaged as an agency worker. But you can’t be furloughed if you’ve agreed to work fewer hours or are still doing some work for your employer.
Anyone who is taxed as a self-employed contractor also can’t be furloughed.
Can I refuse to be furloughed?
Yes – your employer can only furlough you by agreement. We recommend that you think carefully before turning down a request to furlough because, if you say no, you could be made redundant or “laid off” (if your employer has the contractual right to do so) if there is no work for you to do. If you are made redundant, you will only receive a redundancy payment if you are an employee (as opposed to a “worker”) and have worked for your employer for at least two years.
How much will I be paid?
Your employer will claim a grant to cover 80% of your earnings, up to a maximum of £2,500 gross per month. This figure is based on your regular pay which may include overtime (the guidance isn’t clear on this) but will not include any bonuses or commission that usually form part of your salary. Furlough pay will be subject to tax and National Insurance as normal.
If your monthly earnings vary and you’ve been employed for a full year, your employer will calculate your salary by either using the amount you earned in the same month last year, or working out your average monthly earnings from the last year.
If you’ve been employed for less than a year, it will be worked out by averaging your monthly earnings from your start date. If you started work in February 2020, your employer will pro-rata your earnings from that month.
Your employer can “top up” your salary, but isn’t obliged to do so. If you agree to being furloughed, you are accepting a temporary reduction in your salary.
Is the grant paid to me or to my employer?
The money will be paid to your employer who will then pay it to you (unless they’ve already done so). However, the scheme isn’t expected to be up and running before the end of April, therefore there will be a delay before employers receive this money.
Once you are furloughed, you agree to receive a reduced salary and your employer should continue to pay this to you in accordance with its usual payroll. However, if your employer is unable to meet their payroll costs, they will have to wait to receive money from the government before paying you. If they can’t pay you, they should let you know (and ideally, get your agreement).
The scheme will pay wages from the first day of your furlough, so if you don’t get paid straightaway you will receive the money – but this may take a few weeks, which will cause many people problems meeting their usual expenses.
Can I volunteer if I am furloughed or work for a different company?
Once you are on furlough you will not be able to work for your employer, but you can undertake training or volunteering work subject to public health guidance, as long as you’re not making money for your employer or providing services to it.
It is important to remember that while you are furloughed, you remain an employee and, while you may also potentially work for a different employer, your contract of employment may restrict your ability to work for anyone else. If in doubt, speak to your employer and take legal advice if necessary.
I’m on sick leave and only receiving statutory sick pay (SSP). Can I be furloughed instead?
If you are on sick leave or self-isolating you should get SSP, but can be furloughed after this. If you are shielding in line with public health guidance you can be placed on furlough.
What if I’m on maternity leave?
If your employer pays contractual maternity pay they can put you on furlough during your maternity leave.
This will allow your employer to claim up to 80% of the cost of your contractual maternity pay up to £2,500 per month. However, you are not entitled to your normal salary during maternity leave so you can’t ask to be put on furlough in order to receive normal pay instead. If you want to stop receiving your maternity pay you will need to give notice to end your maternity leave and pay – but bear in mind that this means you will have to return to work when furlough ends.
Can my employer make me redundant during or at the end of my furlough?
Your employer can still make you redundant while you’re furloughed or afterwards. However, any redundancy should be in line with normal redundancy rules and procedures, which, depending on the numbers of people at risk of redundancy, may require collective consultation.
Joanne Moseley is a professional support lawyer in the employment team at Irwin Mitchell
