How does the furlough scheme impact on family-related leave and pay?

The Government’s Coronavirus Job Retention Scheme is now open for applications. Under this scheme, employers can claim to cover 80% of the wages for employees on temporary leave – also called furlough – due to coronavirus. This article provides an update on how the scheme applies to employees who are on maternity or other family-related leave, and how it impacts on calculating pay for those planning family-related leave.

Family-related leave includes maternity leave, adoption leave, paternity leave, or shared parental leave.

Can an employer furlough a member of staff who is on family-related leave?

An employer can furlough a member of staff who is on family-related leave. The normal rules for maternity and other forms of parental leave and pay continue to apply.

Employers cannot claim under the Coronavirus Job Retention Scheme for any amounts that are payable to the employee as Statutory Pay, for example Statutory Maternity Pay (SMP), however, where employers pay enhanced contractual maternity, adoption, paternity or shared parental pay, they can claim for this under the scheme. You can read the Government’s guidance here.

What this means in practice is:

• If an employee is in receipt of Statutory Maternity Pay only, this will continue to be paid to them by the employer who cannot claim for any additional support under the Coronavirus Job Retention Scheme.
• If an employee is in receipt of enhanced contractual Maternity Pay, in addition to Statutory Maternity Pay, then the employer can claim for support under the Coronavirus Job Retention Scheme in relation to 80% of the enhanced amount. The employer may decide to pay 80% of the enhanced amount to the employee, or to top this up to 100%.

An employee does not have to bring their family-related leave to an end in order to be placed on furlough however they may choose to do so, for example, to end their maternity leave in order to receive 80% of their pay on furlough if this is more than they would receive as Statutory Maternity Pay. It is important to note that the furlough scheme could end at any time and, once an employee has given notice to end their maternity leave they cannot go back onto maternity leave.

How is furlough pay calculated for employees who have been on family-related leave in the last year?

The Government’s guidance states that claims for employees who are furloughed on return from family-related leave should be calculated against their salary, before tax, not the pay they received whilst on family-related leave.

How will Statutory Pay be calculated for employees who have been furloughed?

In a welcome announcement, the Northern Ireland executive has agreed changes to regulations for anyone entitled to Statutory Maternity and Paternity Pay, Statutory Adoption Pay and Statutory Shared Parental Pay and who has been furloughed by their employer.

The changes mean that they will have the amount they receive calculated based on their full pay and not on the 80% furlough rate of pay.

You can read more on this announcement here.

Find out more

For further information, or for advice and guidance on any support that you may be entitled to, contact our Family Benefits Advice Service on 028 9267 8200 or email hello@employersforchildcare.org.