27th Mar 2020

What does Furlough actually mean?

This is rather relevant when assessing whether to place employees on the Corona Job Retention Scheme (CJRS). 

If we ask Dr Google, the dictionary states “leave of absence, especially that granted to a member of the services or a missionary.”  We’re not aware of too many missionaries on our clients books, but the key word here for me is ‘absence’.  They are not there. 

  • They are not there to work. 
  • They are not there to answer phone calls or emails. 
  • They are not there. 

I make no apologies for repetition as I’ve been asked this so many times over the past week.  No they can’t work, no they can’t furlough 4 days out of 5 and work on the fifth.

To put it another way, to reclaim 80% of an employees salary under the CJRS, that employee must be on furlough.  If they do any work for you, any administration, get involved in any questions or discussions or emails, they are not on furlough.

Hopefully we’ve put that to bed.

We think there may be a case to allow you to put an employee on furlough, take them off, and put them on again.  I would treat this with caution until official guidance is published. 

We believe, and in the eyes of company law rightly so, that Directors cannot be furloughed.  It’s illegal for a company not to have a director managing the business.  There may be a case to furlough one Director if there are two of you, but more clarification is also needed here.  We’re expecting further guidance on Directors next week.

Let’s assume then that you want to put the employee on furlough. 

Please ensure you have the right to do so – we understand there must be a lay-off clause in the contract of employment, if not, you must negotiate furlough with the employee.  If in doubt please seek professional employment law advice.  If you don’t know where to go, https://www.hrdept.co.uk/newcastle/ it’s a good place to start, and their advice on CJRS from an employment law perspective can be found here.

Write to the employee, confirm the date the furlough starts (or started – it can be backdated to March 1 provided no work has been done since the start date), and keep detailed records of any conversations you have.

If Blu Sky run your payroll, also let us know if you intend to pay the full 100% of salary/wages due or just the 80% covered by the Treasury.  We’ll have a template ready for you (details coming on Monday).

We’ll (process permitting) administer the CJRS reclaim on your behalf.  WE don’t yet know the details of the process, or the time it will take for the reclaim to be repaid.  We understand the online portal for claims will be ready by late April, let’s expect claims to start being paid in May.  Anyone in Tech will understand that combination the potential transaction volumes with very quickly developed systems and no doubt light training for operators is, in the Tech sense, an ideal breeding ground for bugs.

Hopefully HMRC will pay you the reclaim amount submitted by Wetherspoons and Sports Direct.

Remember you will still have on-costs – employers national insurance and pension contributions.

If you have any questions please contact your Blu Sky Account Manager.