Layoffs and Furlough Leave
The start of the year seemed the same as any other January..
Your next door neighbour’s Christmas tree was still balanced on their garage door and you thought “when are they finally going to recycle that”. Your email inbox was still swamped from holiday companies offering inspiration for your 2020 holiday. It was still dark as you walked to the car, bus or train after work and some of us were continuing without alcohol for one month. We still flew the same as we did around the world, dined at our favourite restaurants, cafes and bars and didn’t think twice about the availability of bread, eggs or toilet roll at the supermarkets.
Businesses, even some of the largest in the world, have had to take drastic steps in an attempt to minimise the impact of COVID-19. This includes asking staff to take unpaid leave, laying off staff and making employees redundant. As some of you will be all too aware, small charities and services who rely heavily, if not solely, on self-paying service users, have been left with no choice but to layoff staff as the funding simply is not there to pay wages.
The Government announced that they will partly fund salaries for staff who would otherwise have been laid off following the coronavirus outbreak.
What is it?
- The word Furlough is defined as a leave of absence. The government’s programs could have easily been called ‘home leave’ or ‘isolation leave’
- Payment is 80% of salary up to £2,500 per month
- Employers can make up the additional 20% of salary but are not required to do so.
- The scheme is to save jobs but not provide work so it’s a lay-off-with-pay instead of termination.
Who is eligible?
- To be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anyone on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme.
- furlough leave must be taken in minimum blocks of three weeks to be eligible for funding.
- the employee must not be working at all. If they work for even an hour (presumably during their entire three week furlough period), they are not eligible. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
Process: how to do it
- The law (ie process) of how layoffs happen hasn’t changed, it’s only the fact of payments being made which is new and different. Layoffs can only be done with either the (a) relevant clause in the contract or (b) with employee agreement.
- The first process is to get an agreement with the employee—that either a clause in the contract allows the employee to be laid off, or they agree to be laid off to qualify for the 80% pay (or 100% if the employer wants to top up the payment)
- Once the employee has agreed, and we can formalise that agreement when we write to employees, the employer will notify the HMRC.
- Payments will be made for the first three months and then reviewed at that point with the intention to renew if necessary
How to deal with those already laid off
- Those who have been laid off already should be contacted immediately to confirm that they are ‘reemployed’ and their layoff rescinded and payments to be backdated under the Furlough Leave scheme despite it being legal to have carried out the layoff at the time.