Finding your way through furloughing08 April 2020
It would be fair to say, most of us had not heard the term “furloughing” until recently, when COVID-19 prompted the closure of many businesses, so that social distancing could take place in order to reduce the spread of the virus.
So, what is furloughing? (It’s sometimes referred to as moth-balling)
Furloughing is part of the Government’s Coronavirus Job Retention Scheme, aimed at protecting workers’ incomes whilst business-as-usual is disrupted. If an employer can no longer keep their business open or be unable to provide work, an employee can be “furloughed” and through the scheme, receive 80% of their regular wages, up to a monthly cap of £2,500, from the government.
This scheme was warmly welcomed by employers and employees alike when launched, as it meant employers weren’t having to worry about paying wages- often the largest outgoing expenditure for an SME- and they could retain their valued staff. For employees, it gave them guaranteed wages and a retained job in the long run.
No surprise, the implementation of the scheme and furloughing as a process has been tricky and where it was intended to help, has caused problems for some.
The problems seem to arise when employees don’t neatly fit the eligibility criteria. Perhaps, they are too new in their current role (employees must have been on their employer’s PAYE payroll before or on 28 February 2020), or they have multiple jobs (employees can be furloughed by one employer and continue to work for another. If put on furlough by more than one employer, you’ll receive separate payments from each employer. The 80% of regular wage up to a £2,500 monthly cap applies to each job) or maybe you have or are an employee on long-term sick (in which case they would receive Statutory Sick Pay (SSP) for the period of sickness or self-isolation, but can be furloughed after this). Staff on zero-hours contracts have proven difficult to manage. Some employers are applying for furlough for them, but these staff don’t have a set salary that can be neatly totalled up, and it’s unclear how to calculate 80% for these staff.
This is a new scheme and everyone- including employers and employees – is trying their best to navigate for the benefit of all. There are a minority of individuals who try to circumvent the rules. Some employers told their staff not to come in due to having to close. These employees haven’t been furloughed and are now not receiving financial support. Within some sectors, individuals have been furloughed whilst being paid for out of funding that is still being received. And, as we have seen in the past week, some Premier League football clubs have caused consternation by deciding to furlough their non-playing staff, when playing staff continue to earn million pound salaries whilst not getting out of the changing room. Many of these decisions have since been overturned.
How do employers furlough well?
So, the furloughing of staff will continue in the current climate. How can we ensure that it is done in the right way?
Firstly, the decision has to be jointly agreed by both the employer and employee. Once agreed your employer must confirm in writing that you have been furloughed and it is the employer who must make the claim, not the employee. As an employer, you may find this template letter from ACAS a useful resource when putting furlough agreements in writing. Download a furlough letter template . If you are an employee and are concerned that your employer has claimed on your behalf but is not paying you what you are entitled, you should raise this first your employer, then with the Advisory, Conciliation and Arbitration Service (ACAS) https://www.acas.org.uk .
Communication is key to making this process work. Genuine, two-way, open and honest communication between employers and employees is essential and can avoid issues down the line. At the start of this crisis, many employers, especially some operating in the charity and not-for-profit sector, thought they would have to resort to making redundancies. In these circumstances where furloughing has been subsequently used, the staff have been pleasantly surprised at the outcome.
Finally, seek advice from trusted, quality sources. Many organisations and businesses, especially SMEs do not have HR departments on hand to help with processes like furloughing. Government advice is available nationally https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme and local advice is readily available from local LEPs and Growth Hubs, as well as Local Authorities.
Furloughed staff can make a difference in their communities
On a positive note, whilst furloughed staff may not work for their company whilst being on furlough, they are permitted to undertake volunteering. During the coronavirus pandemic, it is more important than ever that we keep people safe and supported across our communities. On our patch, North Yorkshire County Council and York City Council are encouraging employers and employees to consider if they can do their bit to support the most vulnerable people, either by volunteering or undertaking casual paid work that doesn’t impact on and is over and above their primary employment. NYCC is keen to engage these people and businesses in our emergency response. Visit https://www.northyorks.gov.uk/careandsupport for more details. On facebook, the York & North Yorkshire Growth Hub have an Employment and Skills exchange group which seeks to connect people looking for new work opportunities with local needs. This may provide enriching and varied experiences for those people who have been furloughed.