A year ago, few of us had even heard of the term “furlough”. Yet it is now a recognised term of our working lives and will remain so following the Chancellor’s announcement in the budget to extend the Coronavirus Job Retention Scheme to the end of September 2021.
In this article we look at three key issues and how these have developed over the last year:
- The Coronavirus Job Retention Scheme
- Statutory Sick Pay
- Health and safety.
Coronavirus Job Retention Scheme
Following consultation with trade unions and before the first lockdown was announced on 23 March 2020, the government introduced the Coronavirus Job Retention Scheme (CJRS), the official name for what we now know as furlough.
The scheme was designed to protect jobs in light of the threat of mass redundancies due to the pandemic. It enables employers to retain workers on their payroll while at the same time agreeing with them that they should be placed on furlough instead of providing them with work.
The levels of those on furlough have fluctuated according to the various lockdown measures introduced by the government over the year with the highest (68 per cent) in the accommodation and food sectors. According to a House of Commons Briefing 11.2 million jobs had been furloughed through the CJRS.
It was intended initially to last for three months, applying to workers who were on an employer’s PAYE payroll and included on the employer’s notification to HMRC through Real Time Information (RTI – the HMRC’s PAYE system) on or before 19 March 2020.
Subsequently, the CJRS underwent a number of changes over the following 12 months (see LELR 707). From 1 July 2020, furloughed employees were able to return to work on a part-time basis or remain fully furloughed under amended rules. Then on 30 October, it was extended and applied to workers on the employer’s PAYE payroll and included on the employer’s notification to HMRC through RTI on or before 30 October 2020. At that time, the scheme was extended for these workers until 30 April 2021.
From 1 May 2021, the CJRS will apply to more workers since it will include those on the employer’s PAYE payroll and on the employer’s RTI submission to HMRC between 20 March 2020 and 2 March 2021.
An employer can claim for a grant to reimburse 80 per cent of a furloughed employee’s wage costs up to a maximum of £2,500 gross per month. The employer must pay a worker who is furloughed on a part time basis in full for the hours that they actually work.
A year on - how is furlough pay calculated?
This depends on whether the worker is a fixed rate employee (e.g. a worker who is paid an annual salary) or a worker on variable pay who is on the employer’s payroll. Being on the employer’s payroll means that the employer made a payment of earnings for them which was included in the HMRC RTI.
Fixed rate employees
For fixed rate employees, furlough pay is based on 80 per cent of the wages payable in the reference period. The reference period will depend on when the worker was on the employer’s payroll:
- For workers on the payroll on or before 19 March 2020 or for whom the employer made a valid CJRS claim in the period ending any time on or before 31 October 2020, the reference period is the last pay period ending on or before 19 March 2020.
- For all other workers on the employer’s payroll on 30 October 2020, the reference period is the last pay period ending on or before 30 October 2020.
Further guidance is awaited for those workers who can be furloughed from 1 May 2021 and who were on the employer’s payroll between 31 October 2020 and 2 March 2021.
Workers on variable pay
As for fixed rate employees, how pay is calculated depends on when the worker was on the employer’s payroll.
For workers on variable pay and who were on the employer’s payroll on or before 19 March 2020, their pay is calculated at 80 per cent of the higher of:
- wages earned in the corresponding calendar period in a previous year
- average wages payable in the tax year 2019 to 2020
The same applies to workers for whom the employer made a valid CJRS claim ending on or before 31 October 2020.
For all other employees who have not previously been furloughed and who were on an employer’s payroll on 30 October 2020, furlough pay of 80 per cent is based on the average wages payable between 6 April 2020 (or, if later, the date the employment started) and the day before they were first furloughed on or after 1 November 2020.
Further guidance is awaited as to how furlough pay is to be calculated for variable workers who can be furloughed from 1 May and who were on the employer’s payroll between 31 October 2020 and 2 March 2021.
As the CJRS has developed over the past year further changes and clarifications have been made including the right for furloughed workers to have various statutory payments such as redundancy and notice pay to be calculated on their normal pay and not their furlough pay.
An employer cannot claim the grant where an employee is on notice of termination of their employment between 1 December 2020 and 30 April 2021. In that case the employer should pay the worker their full pay.
Statutory Sick Pay
The last year has seen a number of changes to the statutory sick pay (SSP) provisions.
It is payable to those “in employment”, who were incapable of work for four full days in a row (including non-working days) and earned at least the lower earnings limit (£120 per week). “In employment” includes agency workers who are engaged on an assignment at the time they are sick but does not include the self-employed, those who have already been paid 28 weeks SSP and those who are within four weeks of their maternity leave date whose sickness absence is pregnancy-related.
It was clear fairly early on that the SSP provisions were not fit for purpose in a pandemic since those suffering from coronavirus (COVID-19) were not always able to access it. Therefore important changes were made. First the requirement for three waiting days was removed so that SSP became payable from the first day of sickness absence (defined as incapacity for work).
Then the definition as to who should be regarded as “incapable of work” to be entitled to SSP was expanded. Currently they are those who are:
- Shielding (i.e. clinically extremely vulnerable) and therefore unable to work
- Self-isolating and unable to work for one of the following reasons:
- experiencing symptoms of coronavirus (COVID-19) and self-isolating for 11 days
- living with someone (or in a bubble with someone) who is isolating because they have symptoms of coronavirus (COVID-19), and self-isolating for a period of 11 days
- developed symptoms of coronavirus (COVID-19) while self-isolating because a member of the employee's household had symptoms and was self-isolating for a period of 11 days
- been advised that they have come into contact with someone who was, at the time, infected with coronavirus (COVID-19), and self-isolating through the contact tracing system
- tested positive for coronavirus (COVID-19) and self-isolating
- living with someone (or in a bubble with someone) who has tested positive for coronavirus (COVID-19), and who is self-isolating
- been advised to self-isolate at home for a period of up to 14 days before their admission date to hospital for surgery or another hospital procedure and staying at home in accordance with that advice.
From 1 April the sick pay provisions will change again. This is as a result of a letter sent by the Department of Health and Social Care notifying those who are clinically extremely vulnerable in England that from 1 April 2021, they are no longer advised to shield. This means that they will not be eligible for SSP. Instead they are advised to work from home “where possible” and if they cannot do so they are advised to attend their workplace.
Workers who have been shielding but who are unable to return to work safely can request that they be furloughed. Workers who are struggling and feel unable to make the request should seek the support of their union in the first instance.
The ability of workers who have been shielding to return to the workplace will depend on employers ensuring that the workplace is safe and that the health and welfare of employees and others is not at risk.
Health and safety
Following consultation with unions, the government published its coronavirus (COVID-19) secure workplace guidance on 11 May 2020.
This is an additional set of rules that employers must follow to ensure the workplace is safe and focuses on the need to ensure social distancing in the workplace for example by:
- redesigning workspaces to maintain two metre distances between people
- staggering start times
- creating one-way walkthroughs
- opening more entrances and exits
- changing seating layouts in break rooms
Employers have a duty to carry out a risk assessment. This is not a new duty, but coronavirus (COVID-19) has put the risk assessment and the duty on employers to consult with employees and health and safety representatives centre stage during the pandemic. The health, safety and welfare of both employees and others in the workplace has never been more important and employers should assess the risks of coronavirus (COVID-19) in the workplace and how they will manage them.
The risk assessment should be regularly reviewed in consultation with unions as a result of changing circumstances such as the new variants of coronavirus (COVID-19) and in order to protect those most vulnerable such as pregnant women, disabled workers and black, Asian and minority ethnic workers.
With no enforcement action being taken over the last year despite reported outbreaks, most recently in offices, much of the policing of health and safety in the workplace will, as usual, be left to the thousands of dedicated union and elected health and safety representatives. One important development is that workers, as well as employees, now have a right not to be subjected to a detriment or dismissal if they leave the workplace or refuse to return to work because they reasonably believe that there is serious and imminent danger to health and safety (see LELR 703). Whether it is reasonable for an employee or worker to leave their workplace will depend on the extent to which the employer has assessed risk and followed government guidance.
The CJRS has chopped and changed over its lifetime as the government has reacted, often belatedly, to events although it has to some extent successfully avoided large scale redundancy exercises. The failure to increase SSP to the level of a living wage - as called for by unions - was disappointing and the decision to cut access to SSP from 1 April for those who are shielding would appear reckless.
On health and safety, reports of outbreaks in workplaces and new variants show that the coronavirus (COVID-19) secure guidelines are not fit for purpose and that better enforcement of updated workplace safety guidance are crucial to a safe and secure return to work.