Millions of workers affected by the coronavirus crisis have been told they will still get paid 80 per cent of their wages even if they’re not working.
But many people are still confused about what the Government support for businesses means in practice for individuals. There are also concerns over how it will affect other entitlements, such as annual leave and maternity and paternity pay.
Now experts at Festival Park-based accountancy firm Mitten Clarke have put together a handy guide which contains all you need to know about your rights as an employee during the coronavirus outbreak.
What does furlough mean?
A furloughed employee is someone who is temporarily laid off, rather than permanent.
The scheme is open to any employer in the country.
Firms need to discuss this with employees and can only furlough them once they have agreed to it, unless their contract of employment permits temporary lay-offs.
It can only include workers who were in employment on February 28, 2020.
Eighty per cent of the furloughed employee’s wages will be reimbursed to the employer, up to a cap of £2,500 a month.
It will continue for at least three months, starting from March 1, 2020.
Employees can’t work for the company if they are furloughed (even if they’re on reduced hours or reduced pay).
Firms don’t have to furlough all of their employees.
Employers can choose to top up employees’ wages – but don’t have to.
The minimum length of time for furloughing an employee is three weeks.
Who can be furloughed?
Full and part time employees. When claiming the grant under the coronavirus job retention scheme, firms must use the actual salary paid to these employees as of February 28, 2020 (not their current wage).
Employees on flexible or zero contracts. If the employee has been employed for a full 12-month period before the claim, employers can use the higher of the same month’s earnings last year or the average monthly earnings for the whole of the 2019/20 tax year.
If the employee has been employed for less than a year, firms can claim for an average of their monthly earnings since they started working for the company. And if the employee only started in February 2020, use a pro-rata for their earnings so far.
Employees on agency contracts. The grant covers 80 per cent of the furloughed employee costs (up to the cap of £2,500) plus the associated employer national insurance contributions and the minimum auto-enrolment pension contributions on that wage.
Employees will also pay their auto-enrolment pension contributions, unless they have opted out or ceased saving into a workplace pension scheme.
If an employee has more than one job, they can be furloughed for each job separately and the cap applies to each job.
Employees on sick leave, maternity and paternity leave
Any employee on sick leave or self-isolation should get statutory sick pay, but can be furloughed afterwards.
Anyone who is on, or plans to take, maternity leave must take at least two weeks off work (four weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement.
Normal rules apply to anyone who is eligible for statutory maternity pay (SMP) or maternity allowance.
If an employer offers enhanced earnings-related contractual pay to women on maternity leave, this counts as wage costs and employers can claim 80 per cent of this back through the job retention scheme.
The same principles apply where an employee qualifies for contractual adoption, paternity or shared parental pay.
National Living Wage and National Minimum Wage
Individuals are only entitled to the National Living Wage (NLW) or National Minimum Wage (NMW) for the hours they are working.
Furloughed workers who are not working, must be paid the lower of 80 per cent of their salary or £2,500, even if (based on their usual working hours) this would be below the NLW and NMW.
If a furloughed employee takes part in training, then employers need to pay them at least the NLW/NMW for the time spent training, even if this is more than the 80 per cent grant being claimed.
Employees who haven’t taken all of their statutory annual leave entitlement due to Covid-19 will be able to carry it over into the next two leave years.
Almost all workers are entitled to 28 days holiday, including bank holidays each year.
However, most of this entitlement can’t be carried over from one year to the next – it is ‘use it or lose it’.
There’s also an obligation on employers to make sure workers take their statutory entitlement in any one year (failure to do this can result in a financial penalty).
These new regulations will allow up to four weeks of unused leave to be carried into the next two leave years, to ease the burden on businesses later and to allow staff to continue working in the national effort against Covid-19 without losing their leave.