In this article we are focusing on the eligibility and mechanisms governing ‘Furloughed Employees’ in relation to the Job Retention Scheme (which you can read about here).
What does Furloughed Workers Mean?
Furlough employees are ’employees on a leave of absence’ whereby those eligible will see their employers able to use a portal to claim for 80% of their usual monthly wage costs, up to £2,500 per month.
What type of Employees can you claim for?
Providing the furloughed employees have been on the employer’s PAYE payroll on or before 28th February 2020, then they will be eligible. It does not matter what type of contract the employee is on with the Government confirming that employees on (1) full time, (2) part time (3) agency contracts and (4) flexible or zero-hour contracts can be placed on the scheme.
What happens if the Employer has already made the Employee redundant?
If the employer has made an employee redundant because of the coronavirus, the scheme will cover any employee made redundant since 28th February 2020, providing they are rehired by the same employer.
Are there any restrictions for Furlough employees?
Yes – when placed on furlough an employee will be unable to undertake work for or on behalf of the employer or their organisations. This restriction has been widely defined as the employee being prohibited from providing any services or generating revenue for the employer.
Do you have to place all of your employees on Furlough to be eligible?
You do not need to place all of your employees on furlough, however, businesses and employers should first discuss with their staff about being placed on furlough before doing so. This may require changes to be made to the affected employees contract by variation (e.g. agreement of the employee).
In addition to discussing and seeking agreement from employees, employers must have regard to the process of how they have selected employees to be placed on furlough as discrimination laws will still apply.
How much do you have to pay the Employee?
Those employees to be furloughed must at a minimum be paid at least 80% of their regular wage costs up to £2500.00 per month. This does not prohibit any employer from choosing to top up an employee’s salary to 100%, however employers will not be obliged to do so under this scheme.
Fees, Commissions and Bonuses should not be included in the calculation.
What help will there be for calculating the correct amount?
The Government have announced that further guidance will be issued on how to calculate employers claims for Employer National Insurance Contributions and Minimum Automatic Enrolment Employer Pension Contributions.
If you are an employer needing assistance and advice on furloughed employees, then do not hesitate to contact Liberty Law Solicitors on 01582 853 785