Kate Shawcross, associate solicitor in Harrison Drury’s employment law team, offers specific guidance for early years and childcare providers looking to furlough employees and join the Coronavirus Job Retention Scheme.
The Coronavirus Job Retention Scheme (also referred to as the CJRS, or ‘Furlough Scheme’) is an unprecedented and unique temporary government measure to help UK businesses retain their workforces and continue to operate during the coronavirus pandemic.
All employers including early years and childcare providers, are eligible to access the scheme to furlough employees. However, the amount that can be claimed, and the employees that can be claimed for, will very much depend on the funding already received by the provider.
What conditions are placed on early years providers to access the CJRS?
The CJRS guidance stipulates that no organisation should profit from the financial support available the through the scheme. Accordingly, it goes on to state that, where employers receive public funding for staff costs, and where that funding is continuing, employers are 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.
Such funding includes funding paid from the government, which it has confirmed will continue to be paid via local authorities, for the free entitlement for two, three and four year-olds’ placements with early years and childcare providers.
In these circumstances, providers may access the CJRS, if the following conditions are met:
- The employee works in an area of the business where services are temporarily not required and where their salary is not covered by public funding – this could include staff who work with children under the age of two, where funding is not provided.
- The employee would otherwise be made redundant or laid off – for instance, if there is no work available, and there is no funding to cover the employee.
- The employee is not involved in delivering provision that has already been funded (free entitlement funding) – where funding has already been received for these employees, they cannot also benefit from the CJRS.
- Where appropriate, the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child – it would not be appropriate to furlough an employee who was required to care for children of key workers or vulnerable children.
- The grant from the Coronavirus Job Retention Scheme will not duplicate other public grants received and would not lead to financial reserves being created – this aims to stop providers from profiting as a result of the CJRS.
What if the proportion of funding used towards staff wages is not clear to calculate?
The CJRS guidance states that in such circumstances, an employer can access the CJRS to meet the proportion of its pay bill that would otherwise be considered to have been paid from the provider’s private income.
The example provided in the guidance is as follows:
If a provider’s average monthly income is 40 per cent from the Dedicated Schools Grant (DSG) and 60 per cent from other income, the provider could claim CJRS support for up to 60 per cent of their pay bill.
This would be done by furloughing staff whose usual salary or combined salaries come to no greater than 60 per cent of the provider’s total pay bill.
However, providers still need to consider the rules of the CJRS in general. For example, it will not be possible to claim for employees who are still working. Furthermore, any staff who are furloughed must continue to receive at least 80per cent of their wages under the CJRS.
Accordingly, using the above example, it is not possible to simply claim 60 per cent of the provider’s pay bill. Rather, once they have calculated the relevant proportion of private income, the provider will need to ensure that the staff to be furloughed will still receive at least 80 per cent of their wages, within those parameters.
Providers should also take care to ensure that they are not selecting employees for furlough, based on any discriminatory reason. Usual employment rules apply and selection for furlough should be considered carefully.
To discuss your eligibility to furlough employees or for further advice regarding the Coronavirus Job Retention Scheme, contact our Employment Law team on 01772 258321.