Can schools furlough employees?

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It’s a strange and confusing time for everyone, particularly those involved in education. Here our lawyers clarify what the much talked about Coronavirus Job Retention Scheme means to schools and academies.

While COVID-19 might not be impacting too much on most school finances, there may be some adverse financial implications, which we know some schools are trying to address.

As a result, some schools are considering placing employees on temporary leave (furlough) through the Coronavirus Job Retention Scheme. If that is something that’s on the table at your school or academy, our advice is to proceed with caution and follow government guidance, which we highlight below.

Furlough and the public sector

HMRC’s guidance for employers clearly sets out the government’s expectation that the Coronavirus Job Retention Scheme will have limited application in the public sector as most public sector employees are continuing to provide essential public services or are contributing to the response to the coronavirus outbreak.

The guidance also states that, where organisations continue to receive public funding for staff costs, the government expect employers to use that money to pay their 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 as some charities.

Who might be covered by the scheme?

There may be some cases where certain school staff could be eligible for furlough, for example where their salaries are privately funded by enterprises such as sports facilities or private nurseries, but these cases will be limited.

Any school considering furlough must first assess how employees’ salaries are funded. This assessment should be done with their financial advisors and payroll before considering furloughing any staff.

Core funding to continue in schools

DfE have confirmed that schools will continue to receive their core funding allocations as determined by the local authority for maintained schools and through the general annual grant (GAG) for academies – for the 2020 to 2021 financial year (April 2020 to March 2021 for maintained schools and until August 2021 for academies and non-maintained special schools).

This will happen regardless of any periods of partial or complete closure and “will ensure schools can continue to pay staff and meet other regular financial commitments”.

The Treasury Direction regarding the Coronavirus Job Retention Scheme, issued on 15 April, does not refer to public sector employers or publicly funded organisations, which led to confusion over whether such employers could use the scheme.

While you must bear in mind that this is guidance and is updated regularly, the DfE have been pretty clear on this issue so far:

Actions for Schools during the Coronavirus Outbreak (DfE guidance updated on 19 April)

The guidance states: “Teachers and other school staff will continue to be paid during this period as normal, and we expect schools to continue to fulfill their contractual duties to their staff.

“We expect schools to ensure any employees funded by public money continue to be paid in the usual fashion, from their existing staff budgets, in line with the HMRC guidance to public sector organisations.

“Where schools have live assignments with contingent workers that they directly employ, and where the school is that workers’ employer, schools should continue to pay these workers from their existing school budgets and not furlough them.”

School funding: exceptional costs associated with coronavirus (COVID-19) for the period March to July 2020 (DfE guidance published on 7 April)

This guidance details the financial support available and commits to provide further guidance, in June, on the process for informing DfE of any additional costs relating to COVID-19.

However, the document is clear that this is limited to those additional costs that result from COVID-19, not to pay for staff and meet other regular financial commitments for which schools will continue to receive their budgets for the coming year as usual, regardless of any periods of partial or complete closure.

If schools still have unavoidable additional staffing costs they are directed to discuss these with their Regional School Commissioner.

Coronavirus (COVID-19): financial support for education, early years and children’s social care (DfE guidance updated on 22 April)

This guidance states: “No organisation should profit from the exceptional financial support available, and should therefore only access the support required. For example, organisations which continue to receive government funding should not furlough staff whose salaries that funding could typically be considered to fund, and therefore will not need to access the Coronavirus Job Retention Scheme.”

It does acknowledge the situations where we envisage a school may be in a position to access the Coronavirus Job Retention Scheme, for example in relation to staff funded through a leisure centre or private nursery as the guidance continues:

“For public sector organisations where there is also private income which ceases or has reduced, it may be appropriate to furlough staff who would typically be paid from that private income, subject to the 5 conditions below.

“We would encourage organisations to first consider how they would be able to redeploy their existing workforce to help support the coronavirus (COVID-19) response. Educational settings that are in receipt of some public funding should only furlough employees, and therefore seek support through the Coronavirus Job Retention Scheme, if they meet the following conditions:

  • the employee works in an area of business where services are temporarily not required and where their salary is not covered by public funding
  • the employee would otherwise be made redundant or laid off
  • the employee is not involved in delivering provision that has already been funded
  • (where appropriate) the employee is not required to deliver provision for a child of a critical worker and/or vulnerable child
  • the grant from the Coronavirus Job Retention Scheme would not lead to financial reserves being created

 

“It is also essential that the grant from the Coronavirus Job Retention Scheme should not be duplicative of other public grants that your organisations may receive. DfE is considering appropriate measures to monitor use of these schemes in order to detect any duplication of funding, and will be considering potential options to recover misused public funding as required.”

If you and your school have any queries or need any assistance on these issues, or any other matter, please contact Jill Donabie or Amy Sergison.