Furlough Advice and Complimentary Letter
Levi Liebling
I develop HR strategy for SMEs that minimise risk, protect profits and add value .............. speaker | author | HR business strategist
DLP are fielding hundreds of calls about Furlough and are providing the below guidance.
On Friday 20 March, Chancellor Rishi Sunak announced a Furlough Leave scheme to fund salaries for staff who would otherwise be laid off due to the COVID-19 outbreak in the UK.
First, Furlough is only for staff who are not working and who would otherwise be laid off. The purpose of Furlough Leave is to save jobs not subsidise working employees.
- Furlough Leave is initiated by employers. Employees cannot request Furlough Leave.
- The law (ie process) hasn’t changed. Only the payments are new. Think of it as layoffs with partial pay (or full pay if you choose).
- Employers identify employees to be placed on Furlough Leave and notify affected employees.
- Furlough Leave can only be initiated when there is no work.
- An employee on Furlough Leave cannot work for their employer.
- Furlough Leave can be done with either (a) a relevant clause in the contract or (b) with employee agreement.
- So, the first step is to get agreement from the employee or use a clause in the contract that allows the employee to be laid off.
- Once the employee has agreed (or you have activated the relevant clause), you should formalise Furlough Leave in writing.
- After Furlough Leave is formalised, the employer will notify the HMRC.
- HMRC are in the process of setting up a portal for Furlough Leave notifications, which we believe will be available soon.
- Furlough Leave provides 80% of an employee’s salary up to £2,500 per month.
- We don’t yet know if this includes pension, commission or holiday etc
- Payments will be made for the first three months and will be reviewed for extension if necessary
- Employers can make up the additional 20% of salary if they choose.
- In reality this may not be necessary as employees are likely to agree to be at home without working in return for 80% of their salary as opposed to being made redundant and terminated
The word Furlough doesn’t mean anything in prior law but is defined as a leave of absence. This could have easily been referred to as ‘home leave’ or ‘isolation leave’. Don’t get hung up on the term.
The purpose of Furlough Leave is to save jobs—but not to support work. Furlough Leave is a layoff with pay as opposed to a termination.
FREQUENTLY ASKED QUESTIONS
Can Furlough Leave be abused?
There is much debate about whether this is a secure scheme; ie how will the Government know an employee is not working given that the employee might know a claim was made in their name? There seems to be an opportunity for abuse but hopefully, this will be addressed when the legislation is finalised.
What issues are foreseen with Furlough leave?
The obvious issues are that when an employer needs skeleton staff it may choose its best staff to stay on and others to be laid off. This could lead to less successful staff working hard, arriving at the office and worrying about being effected. This is likely to lead to issues and potential discrimination / unrest with no obvious answers.
Can Furlough leave be backdated?
Payments can be backdated to those who were on payroll at end of February and can be claimed from 1st March (see below how to deal with those already laid off)
How do I deal with those already laid off?
Those who have been laid off should be contacted immediately to confirm that they are ‘reemployed’, their layoff is rescinded, and Furlough payments will be backdated. This is just a brief update on what we know so far, and is subject to change but hopefully will help in the next few days.
Feel free to call the DLP team with any questions you might have. Our advisors can be reached at 0330 400 4495.
Complimentary Furlough Letter
DLP is providing a free letter you can use to place employees on Furlough Leave. If you have any questions about the applicability or fine-tuning of the letter give DLP a call at 0330 400 4495. Click here to download the template (available in Microsoft Word and Apple Pages formats).
Helping ambitious entrepreneurs & full time business coaches escape the trap of growing their business whilst sacrificing time & life. Working on the elements of delivery, sales & high quality daily lead flows.
2 个月Levi, thanks for sharing, always good to see some insights from people who have viewed my profile or are connected to me.
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4 年Hi everyone, great to be part of this community. This is very clear and useful guidance Levi - like you I'm fielding calls from my clients in this very challenging time, positives for me, is that it is demonstrating to business owners a) that staff can work remotely - they don't have to be in the office 9-5 (or whatever their contractual terms are and b) BCP is really important - I've talked to my clients over the years about how are they planning for a 'black swan' event. Once you have explained what that means, stock answer is - ' oh yeh, it is on our list'. It's well and truly at the top of their list now. I have clients who are using this as an opportunity to put in place the HR system they have committed to but 'but haven't got time just yet'. Time has been gifted to us, it's is a critical time for lots of businesses, touching most sectors - (wish I had had shares in Zoom) - but use this time to put in place plans to protect your business for future. It's like any other insurance, you pay the premium, hoping you will never have to claim on it - but when it's in place, decisions to be made are less stressful. Unprecedented times call for unprecedented measures - as I heard on a podcast with Robin Sharma - The greatest storms, create the greatest sailors. Good luck and stay safe.