Coronavirus and Furlough Leave

By Angela West

The Government’s recent announcement to introduce “Furlough Leave” will have come as a huge sigh of relief for many employers and employees alike. 

It is very much a changing landscape and one that we are keeping a very close eye on.  The information we have so far is that an employer will have to designate their employees as being on Furlough Leave and notify employees of this change. Furlough Leave or as its official title is called, Coronavirus Job Retention Scheme (CJRS) will cover 80% of your employees’ salaries. 

The aim of the Scheme is to support workers who would otherwise be facing redundancy or unpaid lay offs.  Accordingly if an employee is placed on Furlough Leave they are not permitted to undertake any work for you.  Even though this is undoubtedly a step that is for the benefit of both employers and employees alike, as the Furlough Leave is still subject the terms and conditions of employment, and as you will effectively be changing the status of your employee, you still have to negotiate and get the employee’s agreement to this change. In reality it is hoped that most employees would welcome this situation if faced with the option of being made redundant or being sent home with no pay.

It is currently understood that the Government will be setting up a Portal whereby employers who have designated employees as being on Furlough Leave will complete the information on-line.  Whilst Furlough Leave will cover 80% of those designated employees, it is subject to a cap of £2,500 per month per employee.  Many of our clients are saying that they proposed to top up the Furlough Leave by paying the extra 20% of the employees wage.  It is currently understood that an employer is not required to do this but again as it would constitute a potential breach of contract (as the employees salary will be varied), you would have to get your employee’s agreement to this. 

It is very much a changing landscape, and there are numerous questions that currently remain outstanding such as:

  • Does the 80% include pension and employer’s national insurance contributions? 
  • Can an employer make redundancies rather than placing employees on Furlough Leave? 
  • How is salary calculated for those with irregular earnings? 

 

Relief for our clients who are self employed or freelance also appears to be on the horizon. Following the emergency measures announced yesterday evening to the Coronavirus Bill, the Statutory Self Employment Pay has been proposed. This will compel the government to introduce regulations which will benefit this category of worker. If passed, self employed people should receive guaranteed earnings of 80% of their monthly net earnings taken as an average over the past 3 years, OR, £2917 per month whichever is the lowest.

We are awaiting lots of clarification, and the first question we asked ourselves was does this mean only those who have been self employed for 3 years, and thus be able to evidence their monthly income be eligible?

As stated, this is very much a changing landscape, and as soon as we know more, and have greater clarification we shall endeavour to keep you updated. 

We will continue to update you as and when we receive further information but suffice to say should you have any questions or queries then please do not hesitate to contact a member of our Employment Team who are here on hand to assist you through this very difficult and unprecedented situation. 

Please do keep safe and well.