Since its introduction, a number of VCSE organisations have utilised the government’s furlough scheme to reduce the drain of salary costs on expenditure where some services have had to temporarily close and caused a loss of trading income.
Changes to the scheme
Initially the government’s scheme was temporary, for 4 months starting from 1 March 2020. You could claim 80% of wages up to a maximum of £2,500 per month per furloughed employee. Those employees needed to be on your PAYE payroll on or before 19 March 2020.
Under the announcements made by the Chancellor on 12 May, the scheme will continue in its current format until the end of July. Furloughed workers will continue to receive 80% of their current salary, up to a maximum of £2,500.
However, as part of the cautious road map in the Government’s road to recovery, from 1 August the scheme will alter to enable furlough workers to be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.
Commissioning and furlough
The government’s Procurement Policy Note (PPN) sets out information and guidance for public bodies on payment of their suppliers to ensure service continuity during and after COVID-19.
Within that note is a suggestion that commissioners urgently review their contract portfolio and inform suppliers who they believe are at risk that they will continue to be paid as normal (even if service delivery is disrupted or temporarily suspended) until at least the end of June.
We have come across some commissioners encouraging VCSE organisations to use the furlough scheme rather than to continue to pay organisations as per this directive, even though the furlough scheme only covers 80% of salary costs. Using this approach, staff of VCSE organisations may have to accept a lower salary during this period, or the employer may have to pay the extra 20% out of their reserves.
If your organisation is being encouraged by your commissioner to use furlough, then please get in touch.
Public funding for staff costs
Whatever decision you make about continuing furlough or starting to use the scheme, remember the government says: “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.”
Similarly, you have to remember that the employee cannot do any work for the employer that has furloughed them. This includes providing services or generating revenue.
You can furlough staff for a minimum of three weeks. You will receive payment six working days after making an application.
As a social enterprise you may have come up with ways to trade differently, which will enable some staff to come off furlough. Or, as a charity you may feel more able to deliver services to people and communities affected by COVID-19 now than before and want to access funding to pay those salaries, such as the National Lottery’s Coronavirus Community Support Fund.
We are here to help if you want to chat through your furlough plans. Just send us a message – if using the online form, select support for your organisation, in the reason for contact drop down box.
In addition, Wright Hassall’s employment lawyers have produced an FAQ guide based on the questions they have been asked about furloughing employees.
Get support from VAL
If you are a charity or community group and you need additional support to deliver services during the pandemic, VAL is here to help.
We can offer advice on issues that affect charities, from fundraising to proper governance and managing volunteers.
You get can in touch via:
0116 257 5050