Following on from this article, there has been much discussion about furloughing staff under the government’s Coronavirus Job Retention Scheme (CJRS) where the organisation receives public funding. This article explores this a little further and there are also further resources at the end, including access to a free webinar with Bates Wells, which explores this even further.
The government guidance says (under the section ‘public sector organisations’):
The government expects that the scheme will not be used by many public sector organisations, as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.
Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.
Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.
In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.
What does this mean in practice?
The government expects that:
- a. if you receive public funding in order to deliver essential public services, then those services should continue and staff should be continued to be paid their salary in the normal way.
- b. if you receive public funding specifically to respond to Covid-19, then you are not expected to furlough employees.
- c. if you receive public funding for staff costs to deliver your services, then you should continue to pay the staff if that money comes from public funds.
Take a closer look at your contracts and how staff costs are paid
In cases where you are considering furloughing staff who are not delivering essential public services nor Covid-19 response services, and you cannot redeploy them within your organisation, you may be able to furlough them and claim under the CJRS,but you will need to:
- Carefully check your contracts, and check they do not refer to staff costs.
- Check how you pay your staff, where does the money come from? Ensure it does not come from public funding.
- If your public funding is for ‘general running costs’ and you are not using this money to pay for staff costs, you may be able to apply under CJRS.
- Speak to funders – is it possible to vary your grant, which has been allocated to pay for staff who are eligible for the CJRS, in order to enable you to allocate the funding to other essential activities in order to support your communities and ensure continued liquidity? See this guidance for those who are in receipt of National Lottery Community Fund grants
- Also ensure that the combined total of your grants and Job Retention Scheme payments will not represent more than 100% of the level of total income you would have expected to receive for salaries and associated salary costs during this period in a non-Covid-19 scenario.
- If you are not paying staff from public funding money, then in principle you should be able to make a claim under CJRS for furlough costs, but do consider whether you can re-deploy staff and the impact on your operations if you furlough key staff members whose skills you need to retain.
- Consider all of this within the wider context of your contingency planning and financial implications. The HMRC portal is not expected to go live until the end of April, however successful claims will be backdated to 1 March. See this guidance from NCVO.
Further guidance and support
- Government guidance on how to claim under the Coronavirus Job Retention Scheme.
- Webinar from Bates Wells solicitors from 30 March on the CJRS, which looks at the issue of public funding. You can still access this webinar, you just need to register here and you will be sent an email link. The webinar is free.
- ACAS guidance.
- ACAS templates for furlough by agreement.
- Contact firstname.lastname@example.org if you have specific questions.
We advise you to continue checking for further updates. This guidance was updated on 9 April 2020.