Andrew McClean: What is furlough?
Liz Stephenson: To furlough staff is to give chosen employees a leave of absence in circumstances where the employer could not otherwise offer them work. The scheme provides these employees, who are unable to work during the coronavirus crisis, with a minimum salary.
AM: When should an optical practice use it?
LS: With many optical practices forced to reduce services to essential or urgent eye care to protect public health, businesses are now finding themselves in dire financial circumstances where they must balance supporting their staff alongside a dramatic drop in revenue. Unless your contract allows for you to lay staff off, meaning you can send them home without pay, they are entitled to full pay if they are ready, willing and able to work. The furlough scheme has been introduced to enable employers to retain staff, providing a financial means for businesses to do so via the government support package. All UK businesses are eligible to access the scheme, regardless of size, provided they had created and started a PAYE payroll scheme on February 28, 2020.
AM: How does it work?
LS: The employer will designate affected employees as furloughed workers and notify them of this change. This should be done in writing and the employer should keep a record of that communication. Employees can be furloughed in blocks of a minimum of three weeks. The employer will then submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. Further guidance has been given as to the information the employer will have to provide on the government’s website. HMRC will then reimburse the employer 80% of all furloughed employees’ wage costs up to a cap of £2,500 per month. HMRC will also reimburse the employer an element of national insurance on the reduced wage, as well as the minimum auto-enrolment pension contributions on that wage.
This is a temporary scheme open to all UK employers for at least three months starting from March 1, 2020. HMRC is working urgently to set up the new system and it is hoped the portal will be up and running by the end of April 2020. The AOP is reviewing Covid-19 guidance daily so keep checking our website for the latest news.
AM: How should practices approach furloughing staff?
LS: If you are an employer looking to furlough staff you should consider which staff would be most suitable and which staff you will need to keep in the business if you are remaining open. Employers will want to ensure that they are retaining the skills they need within the business at this most challenging time. Bear in mind that those furloughed should not do any work for you during the period of furlough. Where the NHS is offering financial support for optical practices, the terms and conditions attached to that support vary in each part of the UK and may affect decisions on furloughing staff. You should therefore check this before making decisions.
Have a discussion with your staff about furlough and then consult with staff on an individual basis. You may want to ask for volunteers to be furloughed and if there are too many volunteers you may want to prioritise vulnerable staff for furlough, such as those who are suffering with a disability, are over 70 or pregnant. Remember to keep a written record of the reasons you are choosing to furlough some staff and not others and set out your objective reasons clearly.
The AOP has a template letter to give to employees you wish to furlough. Visit our website for this and additional employer guidance on furlough leave. Unless the contract allows you to send staff home without pay you should seek their agreement to the change.
Key links:
www.gov.uk/guidance/claim-for-wage-costs-through-t...
www.aop.org.uk
