Charlotte Antoniou
Posted on 21 Apr 2020

Coronavirus (COVID-19) – Education Q&A Part 3

Furloughing where a school's private income has stopped or been reduced

Schools may potentially be able to furlough staff where these staff would typically be paid from private income (such as catering, sports facilities lettings, or boarding provision funded by parents in state boarding schools) which ceases or has reduced. However, before looking at furloughing, it is advisable for a school to look at redeploying its existing workforce to help support the Coronavirus (COVID-19) response.

Where a school decides to furlough staff, it should consider its total income from private sources as a whole and claim support through the Coronavirus Job Retention Scheme (CJRS) for staff who would be paid using this private income. Schools must satisfy the following five conditions:

  1. The employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding.

  2. The employee would otherwise be made redundant or laid off.

  3. The employee is not involved in delivering provision that has already been funded.

  4. (Where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child.

  5. The grant from the CJRS would not lead to financial reserves being created.

The Government's guidance gives an example to illustrate this situation: If a school's average monthly private income stream provides 4% of the school's overall income, the school could claim support through the CJRS for up to 4% of its paybill, after exhausting options to meet costs from existing budgets and redeployment. This would be done by furloughing staff (for example, catering staff) whose usual salary or combined salaries are linked with the income lost and come to no greater than 4% of the provider's total paybill.

It is important to bear in mind that the Government will be checking that where staff are furloughed, there has not been a duplication of other public grants, and it will be considering potential options to recover misused public funding as required.

Early years furlough guidance

The Government has confirmed that local authorities will receive funding for free early years entitlement places for 2, 3 and 4 year olds, and that many nurseries will benefit from a business rates holiday for the 2020 to 2021 tax year. As with schools, some early years settings are needed to accommodate vulnerable children or those of key workers. A private early years provider should therefore only seek to furlough staff if the following 5 conditions are met:

  1. The employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding.

  2. The employee would otherwise be made redundant or laid off.

  3. The employee is not involved in delivering provision that has already been funded (free entitlement funding).

  4. (Where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child.

  5. The grant from the CJRS would not duplicate other public grants received, and would not lead to financial reserves being created.

It will sometimes be the case that the early years provider's income will be made up only partially of income from the Government's free entitlements (DSG income). Where some of the provider's staff are funded through private income (for the purposes of meeting the first 3 conditions above), the provider will be able to access the CJRS to cover its paybill which would have been made up from its private income.

The Government's guidance gives an example to illustrate this situation: If a provider's average monthly income is 40% from the DSG income and 60% from other income, the provider could claim CJRS support for up to 60% of their paybill. This would be done by furloughing staff whose usual salary / combined salaries come to no greater than 60% of the provider's total paybill.

These proportions could change in subsequent furlough applications as a result of DSG income changing (but not where income from parents increased or decreased). For example, if this provider subsequently receives additional DSG income from a local authority as a result of providing additional hours of childcare, such that its new DSG income would represent 55% of its total income in February 2020, then its maximum use of the furlough scheme should, from that point, be reduced to 45% of its paybill.

Supply teachers and other contingent workers in state-funded schools

This topic has already been discussed in our recent Education Q&A Part 2 where we confirmed that as employers, schools should not furlough contingent workers as they should be using their existing school budgets. Where a supplier (i.e. here the recruitment agency), rather than a school, is the contingent worker's direct employer, and this worker can continue to work (e.g. they can work from home by giving virtual lessons), schools should continue to use their funding to pay the supplier so as to support the supply chain through this period. If contingent workers are unable to work due to Coronavirus (COVID-19) (e.g. due to sickness, school closures or self-isolation) they should be paid at 80% of their pay rate up to a maximum of £2,500 per month. Here the supplier pays the contingent worker in the same way that they usually would and then invoices this to the school without making a claim under the CJRS.

Nevertheless, the Government has provided further guidance. Firstly, there is no obligation for the renewal of live assignments in the event that the contingent worker would not be needed. Secondly, suppliers may decide to furlough contingent workers via the CJRS in situations where these workers are not on live assignments with schools, or where a previously agreed assignment is due to end. Suppliers must bear in mind that furloughed contingent workers will not be able to provide services for their employer for a minimum of three weeks.

Can a school force an employee to be furloughed?

It is important for schools to remember that public bodies which are continuing to be funded are not expected to be furloughing employees, rather school funding should be used to pay staff. Nevertheless, if a school decides to furlough staff in line with the above (e.g. the staff who would be paid using this private income and who cannot be redeployed by the school) then it can technically force its employees to be furloughed.

This is a commercial decision and it will need to decide which employees will help the business survive the current crisis. When deciding which employees to furlough the employer should keep equality and discrimination laws in mind, keep a note of its rationale and write to the relevant employees to confirm that they have been furloughed. The employer should keep a copy of this communication for their records.

Where schools have furloughed an employee in line with the Government guidance, is that employee still technically employed whilst being furloughed? What happens at the end of the furlough period?

Yes, employees are still technically employed but furlough means that they are not undertaking work for their employer. Furlough under the scheme is a temporary arrangement and after being furloughed (for a minimum of three weeks) they are able to return to their jobs, presuming that there has been the necessary upturn in work to require this. All employees' employment rights (with the obvious exception of pay) are preserved throughout the furloughing period.    

Rachael Lloyd, Senior Associate in Michelmores' Employment team, provides a more detailed explanation of the latest on this scheme here.

If you would like to discuss any of the issues raised in this article, or have other concerns about the impact of Coronavirus, please contact: Hollie Suddards,  Charlotte Antoniou or Tom Briant-Evans in Michelmores' Education team.

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This article is for information purposes only and is not a substitute for legal advice and should not be relied upon as such. Please contact our specialist lawyers to discuss any issues you are facing.