Furlough

Tuesday, April 21, 2020 12:11 PM | Farah Mendlesohn (Administrator)

The UK Government has taken the unprecedented decision to allow employers to furlough employees and apply for a grant that will pay 80% of the employee's PAYE salary up to the value of £2,500. 

The first two lines of the Government guidance reads as follows: If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant. The keywords that the Government and businesses need to look at here are "cannot" and "severely". In short, this action is only to be taken if your business is unable to proceed during this crisis and would become bankrupt or experience severe financial difficulty if this action were not taken.

However, there are some very important conditions that must be met in order for this grant to be accepted. 

Furloughed staff cannot perform any work while furloughed. Phone calls cannot be taken, emails cannot be read or replied to, social media accounts cannot be updated. All of these actions constitute work. Critically, it's highly likely that the Government will audit many firms and staff who applied for grants during this time. This will happen in a year or so, when the immediate crisis has passed, and if they find any evidence that the business continued to run then it is highly likely that they will attempt to claim back the grant money through taxes.

When it comes to voluntary work, the guidance is as follows: A furloughed employee can take part in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation. Your organisation can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.

A. E. Radley

The bottom line is, if you have been furloughed then you mustn't do any work. In doing so, you run the risk of invalidating your claim for a grant and then it will be reclaimed in the future. 

  • The key guidance for EMPLOYERS on the principles of CJRS (which is being regularly updated) is at: www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

  • There is a step-by-step guide for employers (7 page PDF) at: www.gov.uk/government/publications/coronavirus-job-retention-scheme-step-by-step-guide-for-employers

  • Details of how to calculate the 80% salary costs (see below for more on this) are at: www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job- retention-scheme including a useful online calculator being made available from 20 April.



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