As mentioned in our previous blog WHAT IS CORONAVIRUS JOB RETENTION SCHEME, businesses can claim for furlough grant if their business operations have been severely affected by the COVID-19 Pandemic. In the above-mentioned blog, we have already discussed what does furlough mean and how does furlough scheme work.
WHICH EMPLOYEES CAN BE FURLOUGHED?
Let us now understand, some additional bullet points for Coronavirus Job Retention Scheme and Furlough Grant system
- To begin with, there is a cut-off date; 19th March 2020. This means that the employee that needs to be furloughed, must have been on the employer payroll on 19th March 2020. New employees that have been hired after 19th March 2020 are generally not covered by the Coronavirus Job Retention Scheme.
- Employers must have documented proof that their business is not doing well due to COVID-19 and how it has impacted their workforce
- There should be evidence that there is no work for each furloughed worker
- Employees can be furloughed if they need to self-isolate for themselves or for a person, they live with, in accordance to the government guidelines
- Employees can be furloughed if COVID-19 has altered their childcare commitments.
- Those employees who had been on sick leave can begin their furlough term as soon as the sick leave ends.
Which Type of Employees can be Furloughed?
Given, they are on employer’s payroll on 19th March 2020, following employees can be eligible for furlough scheme.
1) Full-time employees (generally understood to work 35 hours or more per week)
2) Part-time employees
3) Any agency employees that work on agency contracts (they are eligible only if they have no work at all)
4) Zero-hour contract workers in circumstances where they your employees on flexible contract basis
What will be maximum furlough salary for employees with two or more jobs?
If a person has two or more jobs, he will receive 80% of his salary for each job. The £2,500 cap will apply to each job individually. This means he will have £5,000 cap if he works two jobs.
What is legal position on working elsewhere while being furloughed?
This is a very subjective question. It will depend on individual circumstances rather than a one fit for all situation ruling. If an employee agrees to be furloughed but uses his free time to top up his salary to manage his outgoings by working in a totally unrelated job, the employer cannot reasonably withhold the employee from doing so. For example, a furloughed computer operator can work as a delivery driver and the first employer cannot reasonably object.
If the furloughed employee work in a related job like a competitor, the employer can reasonably object to the employee taking such a job while on furlough. But let us say the employer had two same level employees. He furloughed one and retained the other. The furloughed employee will be losing 20% or more if the £2,500 cap applies. This will be unfair given one of his colleague is still taking regular salaries. If this furloughed employee is offered a well-paid job elsewhere, the first employer has two choices now. He can either top up remaining salary or cancel the furlough agreement. If both not suitable, the employer can start a redundancy process; in which case the employee will no longer be furloughed.
Ultimately what happens is matter of what agreement is reached between the employee and employer. The UK government has cleared its position that it will not announce a law that will prevent any individual from earning extra in these hard times. The employee and employer can seek regular tribunals and other arbitrary methods where available in case of discord.
Can Business Owners or Partners furlough themselves?
Business owners and business partners will be covered only till the extent of what they receive through PAYE system. If a small business director takes a salary as well as dividends, the furlough conditions will work for salary only. Partner owners or LLP members who receive no payments through PAYE payroll are excluded from furlough grants.
Coronavirus Job Retention Scheme and furlough grant will be of no or very less benefit to people whose major home takes are made up of dividends. These people will be in a better position if they apply for Coronavirus Self Employment Income Support Scheme if their taxable profit is below £50,000 annual threshold.