FURLOUGHING: OPTIONS FOR EMPLOYERS

Kings’ employment team looks at the options for furloughing.

At the weekend the government updated the terms of its job retention scheme, and provided clarity about what furloughed employees may do for the business. Employers cannot ask furloughed employees to do any work that:

  • makes money for the organisation; or

  • provides services for the organisation.

The scheme expressly rules out ad hoc working during any period of furlough – it is all or nothing.

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Company directors

This extends to company directors. Provided they are PAYE and not self-employed they may be furloughed, but their permitted activities will be limited to the conduct of their statutory duties relating to running the company.

Volunteering

Employees can take part in volunteer work or training. However, given that it is treated as working time for the purposes of minimum wage legislation, any time spent training must be paid at the appropriate minimum wage for that employee. If the furlough payment of 80% of the employee’s salary takes them below the appropriate minimum wage entitlement for the training hours, the employer must top up the wages to ensure the employee receives at least the minimum wage for all time spent training.

The available options.

What, then, are the options available to an employer seeking to strike a balance between keeping the business running but minimising wage costs during this period of economic downturn?

  • First, employers need not furlough all of their staff. It is a business decision for the employer who to furlough, and there are clearly cases where it will be more beneficial to employers to retain at least a skeleton staff in order to keep the business functioning.
  • Secondly, the scheme now expressly provides that employees may be furloughed multiple times, it does not need to be one continuous furlough period. An employee must be furloughed for a minimum of 3 weeks in order to qualify for the government grant. They may then be taken off furlough and later re-furloughed again as appropriate, again subject to the minimum 3 week furlough period. There is no specified minimum period for which an employee must be engaged at their normal salary before being eligible to be re-furloughed. With appropriate planning, the use of multiple furlough periods may prove an effective way to minimise overheads and maximise business opportunities and output during these uncertain times.

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