Posted on: 21 April 2020
A guide to temporary granting leave of absence to employees
Because of the outbreak of COVID-19, many businesses needed to temporarily close down, but with a period of uncertainty and low income, many businesses have struggled to pay for one of their most expensive outgoings; their staff.
Because of this, the government put measures in place for non-essential workers to take time off work whilst still, in most cases, receiving 80% of their wage from the government. To help you understand how furloughing works, we have put together this guide to help your business continue to operate and retain staff during this time. Carry on reading to find out more about this process of furloughing workers.
Furloughing an employee
Furloughing an employee means that you are putting their job temporarily on hold. When you have made the decision that you need to put an employee’s position on hold, you will have to give them notice in writing.
The Advisory, Conciliation and Arbitration Service (ACAS) have provided a template letter that you can use to send to your employees to let them know that they will be furloughed and how this will work in regards to their current contract.
Employees can work elsewhere and receive furlough pay, but these working hours must be outside of the contracted working hours. As an employer you could allow your employee to take an additional job in the current contracted hours, with the understanding that they will leave that job when you need them to come back to work. Some of these positions include shop floor assistants in supermarkets or delivery drivers.
Job Retention Scheme
To be able to claim money from the government to pay your staff under the Job Retention Scheme, you must change the employment status of any members of staff being furloughed and inform HMRC that you have made this change to their employment status.
This change of status is still subject to employment law, so depending on the type of contract that you have with your employee, you may need to negotiate the terms of the furlough.
Under the Job Retention Scheme, you will be able to claim 80% of your employee’s wage, up to £2,500, to be able to pay them. This will be in the form of a grant, rather than a loan, so it doesn’t need to be repaid. Whilst businesses aren’t obliged to, you can choose to top up the extra 20% so employees do not lose out financially, this could help to maintain employee morale in this uncertain time.
How long does furlough last?
There is no set amount of time that an employee can be furloughed. It can be for anywhere between a week to the end of the initial timescale for the job retention scheme set by the government; this was originally set to be 3 months from 1st March 2020, but on 17th April, the BBC reported that the scheme would be extended until the end of June.
Furloughing is designed to help businesses during times of difficulty, allowing staff to return to work when the business is in a stronger position.
Not all employees need to go on furlough, especially if they can work from home.
Who can furlough?
Any business can claim as long as they have a UK payroll. This includes businesses, charities and public authorities, including schools. Apprentices working for businesses can also be furloughed.
The government is not expecting to furlough public service employees, as they are the ones likely to be the essential workers. Businesses who receive funding for staff are also not expected to furlough staff, as are businesses who exist solely to deal with Coronavirus.
Furloughing is currently seen as a better option than cutting hours and works much better for employees than redundancy or unpaid leave.
Protecting your business with insurance
It’s important to make sure that you have the right insurance in place to protect the business that you have built.
Every business is different and has its own business insurance needs, which is why we work with some of the UK’s most well-known insurers to make sure that you are getting the right insurance cover for your business.
To help you and your business during these unprecedented circumstances, Premierline has taken steps to ensure that we can continue to offer our award-winning service.
All Premierline employees are now working from home, but our teams are well equipped to be able to answer your questions and help to support your business whilst the coronavirus pandemic continues. We have published answers to many frequently asked questions and our contact details on our customer information page.
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The information and tools contained in this guide are of a general informational nature and should not be relied upon as being suitable for any specific set of circumstances. We have used reasonable endeavours to ensure the accuracy and completeness of the contents but the information and tools do not constitute professional advice and must not be relied upon as such. To the extent permitted by law, we do not accept responsibility for any loss which may arise from reliance on the information or tools in our Insight Hub.