What The Covid-19 Furlough Extension Means For You15th May 2020
Furlough Extension: The Key Points
- The government’s £14 billion per month job retention scheme will be extended to October.
- Furloughed employees will continue to receive 80% of their salary (up to £2,500).
- Employers must start sharing the cost from August.
Chancellor Rishi Sunak’s statement on the furlough extension – like many other government announcements on the Covid-19 measures – begs as many questions as it answers.
Here are some of questions that employers have been asking our solicitors:
Q1: Can an employee take annual leave while on furlough?
A: Yes – but why would they? Despite the promised easing of the lockdown, there is little incentive to take a holiday at this time.
If any employees do take annual leave at this time, they are entitled to be paid their normal rate of pay for the holiday period – not the reduced amount they receive during furlough.
Employers can refuse any requests by giving the required notice.
The government has also amended Reg.13 of the Working Time Regulations to allow workers to carry over up to four weeks’ annual leave into the next two holiday years.
Q2: Can an employee be furloughed if already on maternity leave or other family-related leave?
A: Yes – but there is an initial disincentive for them. Furlough pays them 80% of their salary…but Statutory Maternity Pay (SMP) is 90% of their average weekly earnings for the first six weeks.
After that, however, SMP drops to £151.20/week or 90% of their average weekly earnings (whichever is lower) for the next 33 weeks.
However, employers can recover 90% of Statutory Maternity Pay (or 103% if they are a small employer).
Q3: How do employers deal with bank holidays during furlough leave?
A: Bank holidays are usually part of the legal minimum 5.6 weeks of paid holiday (which must be paid at the full rate of salary).
There has been virtually no advice from the government on bank holidays. But a recently revised (and non-binding) ACAS guidance suggests that:
- employers can still require employees and workers to take paid holiday on a bank holiday (unless they are off sick)
- employees and workers can also ask to take a day’s paid holiday on a bank holiday (but the employer is not obliged to agree)
- if bank holidays cannot be taken off due to coronavirus, employees and workers should use the holiday at a later date in their leave year.
- if this is not possible, bank holidays can be included in the four weeks’ paid holiday that can be carried over; this can be taken at any time over the next two holiday leave years.
Q4: Does annual leave still accrue during furlough?
A: Yes, annual leave will still accrue.
Q5: Can employers require employees to use annual leave while on furlough?
A: Check the contract of employment. Some contracts of employment will allow employers to do this.
The latest government guidance states that employers can:
- require workers to take holidays
- cancel a worker’s holiday.
In each case, employers must give the required notice. At present this notice period is double the length of the holiday period in question.
But employers who require their staff to take holidays during lockdown (or cancel their holidays) are unlikely to win any popularity contests. They may struggle with staff retention when the economy improves.
Nobody wants to spend their holiday in lockdown. Or have their holiday cancelled.
Q6: Can employers rotate which employees are furloughed?
A: Yes, but it would mean extra administration – and potentially a higher risk of infection at the business premises if those people are not working from home. Note that the minimum period for furlough leave each time is three weeks.
Q7: Can employees on furlough be made redundant?
A: Yes, but employers must go through all the correct normal procedures. This is likely to become more of an issue in August as employers are asked start sharing the cost.
At present, it is suggested that the government would continue to pay at least half the costs after August but this is yet to be confirmed.
Q8: What wage costs are covered under the job retention scheme?
A: This is a complex area – but the scheme covers regular wages, non-discretionary overtime, non-discretionary commission, non-discretionary fees and piece rate payments.
The Right To Work From Home
Employees and workers could be given the right to work from home. This would safeguard them from being forced to go back to workplaces where there is a risk of contracting the Covid-19 coronavirus.
The suggestion has come from the Department for Business, Energy and Industrial Strategy.
Employees and workers already have certain rights enshrined in health and safety law. Learn more about them here in this blog post about personal protection equipment (PPE).
Find Out More
Contact employment solicitor Hugh Reid at Coles Miller’s Poole office for further information.
Please note that both the government and HMRC are constantly updating and amending the guidance regarding all of the above. We will continue to monitor this ever-evolving situation.