APRIL 2020 EMPLOYMENT LAW SPECIAL
Furloughing – the law
Following the Chancellor’s announcement on 20 March of the
Coronavirus Job Retention Scheme, employers and staff up and
down the country have been asking themselves, ‘What on earth
does Furlough mean?’
BY ALICE TRANTER, POLICY ADVISOR, MAKE UK
£2,500
The government will
pay employees’ wages
www.manufacturingmanagement.co.uk 15
Angelina Bambina / stock.adobe.com
This is a pretty reasonable
question considering
‘Furlough’ isn’t even a
recognised term under UK law.
For our European friends and
those across the Atlantic, it’s
quite a common employment
status and has been used when
employers would rather not layoff
their employees or subject
them to short-time work.
Make UK has been helping its
members understand this new
term. Furlough, as it stands in
the UK during this pandemic,
is simply a grant status, not an
employment status. It seems
that the UK government have
pinched the term from EU law to
prevent employees from losing
their jobs, hence the
term ‘Job Retention Scheme’.
Government are more
than aware businesses are
hurting now, and want to help
them cover the wage costs of
their employees, up to 80%
of their gross monthly pay to
a maximum of £2,500. They
don’t want businesses to lay-off
their employees; therefore, to
be eligible for a government
grant, the employee must be
furloughed. This essentially
means the employee is not
working and is at home. They
could have named it ‘stay at
home’ worker but perhaps,
furloughed sounds a bit better.
However, there’s a slight
catch. Reimbursements for
employee’s wages aren’t going
to be available until the end of
April. This is because to receive
all the furloughed employees’
wage information, HMRC are
setting up a portal to receive
statements, submitted by
employers. Such a system
will take some fairly major
programming so employers
won’t be able to claim the rebate
until then. The government
has announced that they will
backdate reimbursements to
1 March and employers can
receive a lump sum for wages
in both March and April.
There are quite a few rules
around making an employee
furloughed, which can be found
on Make UK’s website.
Firstly, the employee must
agree to this status with their
employer. If they don’t agree,
which is unlikely considering the
alternative might be redundancy
or being laid-off, then they can’t
be furloughed. Simple as that.
Secondly, the employee
who is to be furloughed, must
be on a contract and on the
payroll (PAYE).
Finally, a furloughed
employee cannot be in receipt
of any other employmentrelated
payments. This would
include holiday pay, maternity
or paternity pay, SSP (both
COVID-19 related and the
original SSP), and any other
paid work.
The reason to furlough an
employee, is for their wages
to be met by government, not
to act as a second income.
Therefore, if the employee has
other income from another
employer, they cannot be
furloughed. But because
furlough is simply a grant
status, all an employer has
to do is receive consent from
the employee in question,
and change their status. Make
UK’s example would be, if an
employee had recently been
laid-off, the employer can simply
change their status to furlough.
Any employee can be
furloughed, even if there is
work available elsewhere in the
company. It’s simply criteria for
employers who cannot afford
to pay their employees’ wages.
Make UK has advised
members who are struggling
to pay their employees’ wages
to lay them off for now, until
the Scheme opens in April,
as making them redundant
would make them ineligible
for the Scheme. It’s open for
a temporary period of three
months, subject to review for
an extension.
To find out more, Make UK has
detailed FAQs and guidance
for employers and HR advisors
on furloughed workers,
and the logistics of the Job
Retention Scheme itself,
as part of its Coronavirus
guidance series, at
www.makeuk.org/coronavirus
/www.manufacturingmanagement.co.uk
/stock.adobe.com
/coronavirus