What is the salary cap for receiving 80pc?
The grants from the Government will cover 80pc of your monthly salary up to £2,500, this means it includes people earning up to a yearly salary of £30,000. Anyone earning more than this will be covered by the scheme but will receive the maximum £2,500 benefit.
Guidance on the scheme has said employees will still pay Income Tax, National Insurance contributions, Student Loan repayments and any other deductions (such as pension contributions) from their wage once the grant has been received.
Can I work elsewhere while on furlough?
Generally speaking, no. Most contracts will require employer’s consent to work for other companies and this should apply to furlough leave.
Mr Hammerton said: “This need for consent should act as a gateway to employees getting something of a ‘windfall’ where they earn significantly more on furlough than when in ‘normal’ employment. On the other hand, employers (and HMRC when administering the scheme) may well be more understanding where an employee is merely ‘topping up’ income lost due to being placed on furlough.”
You can join the 750,000 volunteers helping the NHS during the pandemic. The Government confirmed that those on furlough will be permitted to volunteer without risk to pay.
Will my company still pay pension contributions?
Pension contributions would continue to be due unless agreed otherwise in the terms of the contract, according to Mr Hammerton.
The Department for Work and Pensions has confirmed that employers remain liable for minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.
Businesses can claim grants under the job retention scheme including minimum employer auto-enrolment pension contributions on top of the 80pc of the employee’s salary. This means that businesses can get support without needing to suspend auto-enrolment.
How does furlough work for those on zero-hours contracts?
Zero hours workers who are on the payroll should be able to be furloughed and receive 80pc of their salary each month, according to Kate Martin, of legal firm JMW Solicitors.
Ms Martin said: “The nature of zero hours is that pay can be variable, but based on our current understanding, employers would need to look at recent months of an individual employees’ salary to work out what the 80pc figure would be.”
Mr Hammerton, of Eversheds Sutherland, suggested HMRC could use average earnings over a 12 or 52 week ‘countback’ period to decide on an appropriate payment when reclaiming under the Scheme. “Both of these figures have a basis elsewhere in employment law,” he added.
Can an employee request to be put onto furlough?
In most cases the decision to put someone into furlough is made by the company as it is an alternative option to making someone redundant.
Employees could ask to be put on furlough but there’s no obligation from the employer to enact that.
The Treasury has confirmed that employees who are shielding in line with public health guidance can be placed on furlough. Likewise parents can be put on furlough if they need to focus on childcare.
Mr Hammerton said: “It’s not a right to be furloughed, merely a scheme for employers to recover certain costs.”
Some employees could feel discriminated against, either because they have been furloughed or have not. Those minded to make claims should be conscious that if the business has a rationale for choosing one person to furlough over another then it is unlikely to be successful.
“In any event, many employers are facing existential threats and the risk of a small number of such claims arising is likely to be low down the priority list right now,” Mr Hammerton said.
The employers should at the very least consider the option, particularly before moving to redundancies, according to Katie Martin.
This would be in line with the government’s objective to minimise job losses during the pandemic, she added.
Can directors furlough themselves?
Technically yes, if a director is not only an “officer” of the company but also an employee then they can furlough themselves. They qualify to apply for the grant if they have a contract of employment with the employer and were on PAYE on March 19.
But you cannot undertake work of any kind for the company while you are on furlough. This might be tricky for directors who still need to steer the company through the tricky times and plan ahead.
Practically, they would be able to do very little in their officer-only capacity before they strayed into “working” as an employee, Mr Hammerton said.
They would be permitted to do tasks including reviewing and filing statutory annual accounts and Companies House requirements, however.
What are the quirks in the system?
Employers will face a moral dilemma when it comes to how they go about cutting costs.
Before the Chancellor made the announcement some businesses had already announced their employees would receive a 50pc pay cut but will be expected to continue working full time.
The new care package means that these employees would be better off not working and being put on furlough than working full time with the pay cut.
Businesses will have to make the difficult decision about which employees they penalise and put on furlough, reducing them to 80pc pay, and which they keep on full time with full pay.