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Coronavirus - How Does the Job Retention Scheme Apply to Academy Trusts and Maintained Schools? - 2 June 2020

on Friday, 01 May 2020.

As employers across the UK face increased financial pressures due to the coronavirus (COVID-19) pandemic, the government has introduced a number of temporary measures to alleviate some of the financial pressures.

One of these measures is the highly published Job Retention Scheme (the 'Scheme'), which has introduced the concept of 'furloughing' staff where they are otherwise not needed as a result of coronavirus. The Chancellor has now advised that this Scheme will be extended to 31 October. The online portal was available from 20 April to start accepting claims by employers.

The purpose of the Scheme is to enable employers to retain staff who are not required to work for the foreseeable future, and who may therefore otherwise be laid off without pay or made redundant.

Under the Scheme, the government has committed to reimbursing employers for some salary and associated costs. Employees who are furloughed will receive 80% of their usual salary, up to £2,500 per month. Guidance on the Scheme confirms that the Scheme is open to casual staff as well as those employed on a full-time or part-time basis.

Whilst the Scheme has been widely welcomed as a lifeline for many employers during the pandemic, questions still remain as to how this applies in practice and, in particular, whether the Scheme is available to academies and maintained schools. This article considers the applicability of the Scheme and addresses some of the frequently asked questions.

There is considerable and fast moving guidance in this area. We would recommend that academies have particular regard to the government guidance;

Coronavirus (COVID-19): financial support for education, early years and children's social care

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Is the Scheme Available to Schools and Academies?

The government guidance states that: "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."

Accordingly, where questions as to the availability of furlough arise, furlough should be considered on a case-by-case basis and the first question to ask is how the individual's pay is funded.

Where you employ staff and the cost is covered by your government funding, these staff cannot be furloughed. As funding will be continuing, you may be under some pressure not to take steps to reduce staffing. However, you can take steps should you need to do so either on a short term or longer term basis, either through exercising any contractual rights to reduce hours/pay or through a redundancy process.

Conversely, if you have staff whose pay is not met by government funding, and who may not be needed in the short term as a result of coronavirus, you may be able to use furlough.

Dealing with Staff on Your Payroll with Zero Hours Contracts

As set out above, your ability to utilise the furlough scheme will depend on where the funding comes from to cover each person's pay. Assuming that zero hours staff are paid using GAG funding, they will be unable to be furloughed.

On 28 April, the DfE published updated guidance for schools, which sets out the principles they recommend are followed. This is advisory only but contains the following sections in respect of zero hours or casual workers:

  • Where needed, staff should continue to be engaged and the terms of their contracts observed.
  • Where staff would have been needed, but as a result of COVID-19 are no longer needed, then the recommendation is that they should be paid at 80% of their typical pay.
  • It is implicit that where staff would not have otherwise been needed (irrespective of COVID-19) then if there is no obligation to offer them work under their contracts, schools do not need to do so.

The guidance contains a method for calculating the 80% pay based on a review of the previous 12 weeks to determine the average days or hours worked. This average figure should be used to underpin the calculation of 80% of gross pay (up to a monthly cap of £2,500). The total amount payable should be limited to the amount the school or academy had originally budgeted for such workers from their public funding.

Dealing with Staff Engaged Through an Agency

Notwithstanding the overriding point about GAG funding, employees cannot be furloughed if they were not on your PAYE payroll on or before 19 March 2020 and were not notified to HMRC on an RTI submission on or before this date. As agency workers will be on the agency's payroll and not that of the School/Trust, you cannot furlough these staff. This will be a decision for the agency and any agreement regarding furlough will be between the worker and the agency.

The Cabinet Office has issued guidance to protect 'contingent' workers for public sector organisations. The guidance directly covers central government departments, although all public authorities are encouraged to have regard to it, although there is no legal obligation to follow it.

The guidance is clear that, in most cases, the costs for agency supply workers (called contingent workers) shouldn't be claimed under the retention scheme, as essentially their costs are being covered by public funding already, so the public sector employer should use that funding to continue to fund their employment costs. The Cabinet Office guidance encourages academies to continue to pay for the agency for agency workers, based on 80% of wages and subject to the £2,500 cap.

If the agency worker is not paid from GAG funding then the academy trust may wish to terminate the assignment (in accordance with any contractual provisions). The agency may at this point place the worker on furlough leave.

Government guidance recommends how agency staff should be dealt with. In essence it recommends that:

  • Where schools have agency works on live assignments who can work as normal this should continue and the agency should be paid in the usual way.
  • Where there is a live assignment for an agency worker and this would continue but for COVID-19, then schools should continue paying the agency for the length of the assignment 80% in accordance with Cabinet Office guidance which will then be passed on to the member of staff.
  • That assignments do not need to be extended or payments made to agencies if there are no live assignments and the resources are not required. The agency would be able to furlough their staff if appropriate for them to do so.

Dealing with Staff Who Fall Outside of GAG Funding

If GAG funding does not cover the salaries of staff, you may be able to utilise the Scheme and furlough these staff.

In order to access the Scheme, employers must 'furlough' affected staff. Staff who are furloughed cannot undertake any work for their employer during the furlough period.

Should you wish to furlough staff, the first step is to identify which staff this applies to. Where an entire category of staff is to be furloughed as an alternative to being made redundant, selecting affected staff will likely be straightforward. However, there may be cases where only a skeleton staff body will need to continue to work, with the remainder no longer required to work. In this case, you will need consider how you select staff for furlough, whether this is on a voluntary basis or through selection criteria. We recommend that a clear business case and rationale for the selection is retained and that this is carefully documented for your own records.

The Treasury have issued a Direction which states that an employee is a furloughed employee if:

  • They have been instructed to cease all work in relation to their employment. This instruction must be agreed in writing (which may be in an electronic form such as email).
  • The instruction is given by reason of circumstances arising as a result of coronavirus or coronavirus disease. This is now very broad and there is no longer any requirement for there to be an underlying risk of redundancy.

This provision that there must be agreement is different from the HMRC guidance. The latest HMRC guidance states that to be eligible for the grant, employers must have confirmed in writing to the employee that they have been furloughed but the employee does not need to have responded. As long as this is done in a way which is consistent with employment law it will be valid. Accordingly, although agreement will be needed if pay is to be reduced, it is possible that if an employee has not raised any objections, that inferred agreement may be sufficient.

Best practice would always have been to have some form of written/email confirmation agreement from employees. The good news is that there is no requirement for the written agreement to be obtained before the start of the furlough period, and so employers may wish to check the audit trail and consider if it would be beneficial to follow up with employees.

What Costs Can Be Recovered?

Up to 31 July, up to 80% of costs can be recouped (up to £2,500 per month) and trusts will have to decide whether to seek to reduce pay to this level or maintain usual levels of pay and bear the cost of the difference. Employers are not under any obligation to make up the difference and therefore this is an area in which you can exercise your discretion. You might wish to consider this carefully on the basis that payment of full salary to furloughed staff may be more contentious when there are also staff who are working during this period. In particular, the perceived unfairness of a scenario where furloughed staff and those who are required to continue to work, are in the same financial position.

From 31 July, although furloughed employees must continue to receive up to 80% of salary (up to £2,500), the amount that employers can seek by reimbursement will reduce:

  • from 1 August, employers will no longer be able to claim for the employee's National Insurance contributions and pension contributions
  • from 1 September, employers will only be able to recoup 70% of salary (up to a maximum of £2,190)
  • from 1 October, employers will only be able to recoup 60% of salary (up to a maximum of £1,875)

Should you require any further advice in relation to the above matters or other employment issues arising out of the current situation, please contact Alice Reeve on 07741 271363, or complete the form below.

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